The Interoperability-Integration Debate: Where APIs Fit

Originally published in the PYMNTS B2B API Payments Tracker

 

From mom and pop retail shops to the world’s largest companies, nearly every business is looking to offer the latest technology to its consumers. For many in the financial services world, though, implementing innovations is easier said than done.

So, what’s standing in the way of FIs, the largest of which come to the table armed with big budgets and endless resources? According to Bruce Parker, CEO of cloud-based payment utility Modo, the chief obstacle to implementing today’s innovations are those of yesterday.

Parker’s take is reflective of PYMNTS latest Innovation Readiness Playbook research, which revealed that outdated IT infrastructure remains a significant roadblock for payments innovation. At least 35 percent of credit unions, commercial banks and community banks — including 40 percent of the top performing FIs — cited integrating legacy technology with new innovations as the biggest hindrance to innovation.

But, Parker believes he and his team may have found a solution to legacy technology woes by avoiding the integration process altogether. In a recent interview, he described how Modo works to make old and new technology interoperable, rather than integrated, through a range of APIs and other solutions.

“The [systems] that have achieved scale, the ones that we actually use every day, are in general, pretty old,” Parker said. “When people try to do new stuff, they bump their heads on that and say, ‘How do I work with this so I can have my modern mobile app, my modern web server and my modern Internet of Things solution interoperate?’ That’s where we come in.”

 

Making old and new work hand-in-hand

Financial players of just about every size and scope need help making old and new technologies collaborate. That’s true for FIs and service providers alike, including giants such as Bank of America and Mastercard and newer FinTech players like Klarna.

“All of these payment systems are requesting, consuming and producing data in very different ways.” – Bruce Parker, CEO of Modo

“All of these payment systems are requesting, consuming and producing data in very different ways,” Parker explained. “The definition of a transaction on a credit card system versus a loyalty rewards system, versus Alipay, versus the bank networks like SWIFT are radically different from one another. Even simple things like when a transaction is officially started to when it is officially stopped are all different.”

Getting these systems on the same page is often nearly impossible, he added, making interoperability so critical. It enables each generation of technology to work in the way it was designed to — and to do so together.

Modo offers an API- and cloud-based utility that stores and categorizes transaction data from legacy systems in the cloud, rather than forcing each system to store the data itself. This allows the solution to work with any payments processing system, new or old, to collect and store that transaction data.

“The old stuff can stay old, [and] the new stuff can say new,” Parker said. “We figured out a way to tie into any payment system, any ledger, any bank account, any system of value or accounting system [and] represent the data it has or needs to receive in this one, universal form. We break everything down into its component or molecule parts in four categories of data.”

 

Read the full feature story on Page 6 of the PYMNTS B2B API Payments Tracker

 

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