Core systems interact with capabilities such as transaction processing, decisioning, reporting, analytics, authentication and security. Instead of locking these functions together with complex, expensive customisations, many startups, spinoffs and incumbents alike are embracing a composable banking approach.
Composability allows financial institutions to choose from a host of best-in-class partners and to expand their offerings with greater ease and flexibility. With new technologies and customer expectations at play, this agility has become all the more important.
APIs are the building blocks of composable banking
The use of application programming interfaces (APIs) is presenting a world of possibilities to financial institutions. They enable the flow of information between applications via easy connection with core components and external solutions.
The heart of the Mambu platform is an engine that supports lending, deposits, current accounts, transactions and accounting in an agile, cloud-native way. Providing functionalities via API is a cornerstone of our composable banking ethos as APIs support critical communications between Mambu and other upstream and downstream systems.
The current state of synchronous APIs
Traditionally, APIs make requests synchronously. This means that API users have to wait until an application like Mambu finishes the action e.g. a transaction processing is complete. For instance, with card transactions or instant payments, some actions need to happen synchronously before a core banking system like Mambu can decide if a transaction should go through or not.
Therefore it’s not a matter of disregarding synchronous APIs, but looking at different solutions for cases where latency of transaction requests might be a concern. That's why Mambu keeps improving existing APIs but also introducing asynchronous capabilities, as developers need better and scalable solutions.
Building for scale with asynchronous APIs
This brings us to the benefits of asynchronous APIs. In modern event-driven software architectures, asynchronous communication is the key element. This allows requests to flow smoothly, while increasing supported transaction throughput. This also boosts reliability through better resource allocation.
With async APIs, if the infrastructure is not ready for a high load of requests, transactions will never fail. They will instead wait in the message broker queue for processing when possible. Mambu offers asynchronous APIs for transactions such as deposits (credit) and withdrawals (debits). There are many benefits for financial institutions. Let’s dive into a few.
Greater scale and efficiency
Asynchronous APIs handle a large volume of requests and transactions without causing the system to slow down or crash. How this works is that APIs accept and queue requests in the background, freeing up resources to continue accepting new requests. This empowers banks and fintechs to scale operations, while improving the developer experience.
Asynchronous APIs also handle errors and exceptions gracefully. In action, this means applications can send a webhook or streaming API event with either a transaction confirmation or with an error message informing the API user of the reason why the transaction failed. We see many benefits for products with high volumes and high concurrency, such as within an internal banks’ accounts and with nostro accounts, which make international transactions easier and faster.
Enhanced user experience
With an asynchronous API, users can interact with the system while their transaction processes in the background. This means that users don't have to wait for the transaction to complete before they can perform other actions.
There is also opportunity to meet the performance needs of new use cases such as merchant accounts, especially in the e-commerce space. For instance, whenever an account aggregates a lot of payments, Mambu will process them in a fast, reliable manner. On top of that, it will also support new use cases, such as streamlined transactional fees processing.
Asynchronous APIs are a must in the new world of transactional banking focused on streamlining processes and delivering real-time customer experience. Async APIs add to the suite of extensive functionality that our customers enjoy to build and deliver delightful financial products to their end consumers.
Curious to learn more? Get in touch today to compose your own destiny, aligned to your business and customer needs.