API-enabled architecture: 3 approaches to IT modernization for banks

The introduction of open banking regulations in Europe through PSD2 requires banks to enable third-party providers to integrate customer account information and payment capabilities with customer consent. This has led to a significant shift in the way banks approach IT modernization, with many adopting cloud-based architectures and APIs to meet regulatory requirements. Banks that have acted early to implement APIs have seen major advantages, including improved management of customer impacts during COVID-19, wider product offerings, and increased customer engagement. The choice of approach to IT modernization depends on the bank's willingness to move towards a platform strategy, with some adopting architectural transformation strategies and others opting for lift and shift or refactoring existing codebases. Successful modernization requires demonstrating the business case for change and leveraging monitoring and observability tools to show key metrics improvements.

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