Use Web Services to Modernize Applications and Support Omnichannel Strategies

Posted by John Bennett on April 22, 2015

This post is an excerpt of an article by Dragnet Solutions CEO Greg Cote for the WIB Directors Digest newsletter.

Banks find themselves facing two daunting technology challenges:

  • first, updating or extending legacy applications to take advantage of Big Data, faster analytics and mobile devices; and
  • second, creating omnichannel solutions that deliver these improved IT services to every customer channel, including branches, online services and mobile devices.

Web services enable banks to address both these challenges simultaneously.

The Advantage of Web Services

A web service is a software function that is continuously available at a web address. Other applications and services can call a web service and make use of its functionality and data without having to be written in the same programming language as the service itself.

A decade or two ago, banking software consisted primarily of large, monolithic applications created by a few vendors. In contrast, modern day web services are tens or hundreds of smaller, specialized functions that can be combined and customized as needed to create new software solutions, quickly and efficiently. Instead of a monolithic block, imagine a web services application as a jigsaw puzzle comprised of tens or hundreds of little pieces, each optimized for its particular function.

Whether monolithic or not, financial services applications must be secure. Fortunately, the openness of web services – the ability for one service to invoke another – in no way jeopardizes the stringent IT security expected of any financial services application. Web services can be written to enforce authentication, encryption, access control rules, logging and other common security features and practices. Advances in modern web services have significantly closed the perceived security gap between web services and more conventional, proprietary in-house enterprise software platforms.

In addition to openness, web services offer flexibility and speed. They give banks the ability to create new solutions that combine different services – for example, an authentication service, a query to a core system and a call to a sales or marketing system – in a single solution without having to build a wholly new, stand-alone application that includes its own authentication services, its own core capabilities and its own marketing systems.

This flexibility makes it easier for banks to continuously improve their services. For example, if an application calls a check-imaging service, and that service is upgraded, the bank does not necessarily have to rewrite the entire application. Rather, it can just call the updated web service and benefit from the capabilities of that new, improved web service within the larger application.

The use of web services allows a bank to combine best-of-breed functionality from multiple vendors. Innovation tends to traditionally flourish in smaller, more nimble vendors. The advent of web services allows a bank to marry the innovation of these leading-edge vendors with the larger platforms offered by more traditional vendors, such as core systems. Integration with a modern web service, while requiring some IT resource allocation, also allows smaller financial institutions to keep their competitive edge.

The Pressure to Innovate

The need for continuous improvement is not likely to go away. Developing new, wholly self-contained applications that take advantage of all the latest advances in mobile technology, security, etc. and deploying those applications every six months or so simply isn’t feasible for most institutions. To innovate quickly, banks need a more flexible framework that supports continuous improvement rather than periodic, monumental improvements that are rolled out only every few years.

By adopting a web services architecture in which applications call select best-in-class web services to create a customized solution, banks can respond to new technical opportunities and changing market requirements more quickly.

Meeting the Omnichannel Challenge

Web services can also help banks better meet the challenge of delivering exceptional service to customers in any situation:  on mobile device, at a desktop computer, or in a branch.

Omnichannel strategies require consistent data and similar experiences to be delivered over multiple channels. When a customer accesses her bank account on a smartphone, that experience should not be jarringly different from accessing her account on a desktop computer or tablet. Developing wholly different applications for each channel is costly in terms of development costs and ongoing maintenance.

A better solution is to create applications in each channel that invoke common features as Web services, so that a common pool of services provides consistent data and experiences across all channels.

Technology is changing faster than ever. Successful banks will take advantage of new IT developments to serve their customers and increase their own efficiencies and profits.

In these fast-moving times, Web services provide the building blocks that banks and other institution need to create new, compelling IT solutions.