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API-First Banking: Evolution of Customer Journey Analytics

DOI:10.48175/IJARSCT-23633

Authors:

Dyuti Dave

Harrisburg University of Science and Technology

Nikhil Sagar Miriyala

Oracle Corporation

Anu Rai

University of the Cumberlands

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API-first banking is a novel approach to banking in the rapidly changing financial services industry, with a focus on using Application Programming Interfaces (APIs) to improve customer journey analytics and customer experience. Regulatory requirements, growing fintech competition, and banks' need to adapt to the digital revolution are the main motivators. API-first banking is now a revolutionary model that fundamentally changes how customer data is collected, analyzed, and responded to. This paper examines how customer journey analytics evolved in API-first banking architectures, illustrating how the shift from traditional banking architectures to API-based systems enabled it to gain unprecedented insights into customer behavior and preferences. With analysis of real-world deployments at multiple banking institutions, we demonstrate how API-first approaches facilitate real-time journey mapping, predictive analytics, and tailored service delivery at scale. We also reveal key technical and organizational barriers to API-first analytics adoption, including data governance complexity and cross-functional alignment necessities. This research contributes to the current body of knowledge on digital banking revolution through the presentation of a comprehensive framework for understanding how API-first approaches are revolutionizing customer journey analytics and shaping the future of banking services. This research paper aims to examine the revolution of customer journey analytics in the context of API-first banking, looking at how banks are leveraging data and technology to enhance their understanding and delivery of services to customers.

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IJARSCT

ISSN (Online) 2581-9429

International Journal of Advanced Research in Science, Communication and Technology (IJARSCT)

International Open-Access, Double-Blind, Peer-Reviewed, Refereed, Multidisciplinary Online Journal

Volume 5, Issue 1, March 2025

www.ijarsct.co.in

Impact Factor: 7.67

API-First Banking: Evolution of Customer

Journey Analytics

Dyuti Dave

, Shubham Metha

, Nikhil Sagar Miriyala

, Anu Rai

, Prakhar Mittal

Technology Analyst, Barclays, USA

Software Engineer, Northwest Bank, USA

Senior Software Engineer, Oracle America Inc, Texas, USA

Technical Product Manager, Ph. D in Information Technology, M.S. in Information Technology and Management, USA

Manager Supply Chain, Deloitte USA

Abstract:

API-first banking is a novel approach to banking in the rapidly changing financial services

industry, with a focus on using Application Programming Interfaces (APIs) to improve customer journey

analytics and customer experience. Regulatory requirements, growing fintech competition, and banks' need

to adapt to the digital revolution are the main motivators. API-first banking is now a revolutionary model

that fundamentally changes how customer data is collected, analyzed, and responded to. This paper

examines how customer journey analytics evolved in API-first banking architectures, illustrating how the

shift from traditional banking architectures to API-based systems enabled it to gain unprecedented insights

into customer behavior and preferences. With analysis of real-world deployments at multiple banking

institutions, we demonstrate how API-first approaches facilitate real-time journey mapping, predictive

analytics, and tailored service delivery at scale. We also reveal key technical and organizational barriers to

API-first analytics adoption, including data governance complexity and cross-functional alignment

necessities. This research contributes to the current body of knowledge on digital banking revolution

through the presentation of a comprehensive framework for understanding how API-first approaches are

revolutionizing customer journey analytics and shaping the future of banking services. This research paper

aims to examine the revolution of customer journey analytics in the context of API-first banking, looking at

how banks are leveraging data and technology to enhance their understanding and delivery of services to

customers.

Keywords: API-first Banking; Customer Journey Analytics; Digital Banking; Financial Services

Technology; Banking Architecture.

I. INTRODUCTION

The banking industry has undergone a significant transformation in recent years, driven by the increasing adoption of

digital technologies and the evolving needs of customers. One of the key trends in this transformation is the shift

towards an "API-first" approach, where banks are leveraging application programming interfaces to enhance the

customer experience and streamline their operations[1,2].

This research paper highlights the transformative impact of APIs and open banking on the financial sector, particularly

in enhancing customer journey analytics and overall customer experience. APIs will be the digital tools that usher in a

new age of customer convenience, as regulatory changes like the Payment Services Directive (PSD2) in Europe and the

UK require banks to open up access to customer data to third parties [7]. PSD2 will be a catalyst for unprecedented

customer-oriented change, as banks and FinTechs leverage PSD2 opportunities to amend their operating, business, and

revenue models [8]. Open banking, enabled by APIs, provides the foundation for the concept of "embedded finance,"

where banks can embed their financial services into the products of non-bank companies, offering seamless processes

and increased convenience to customers [9]. The shift in the Japanese financial industry towards open APIs, which is

expected to be a powerful trigger for a value chain revolution in the banking and financial services industry [10].

Finally, the transformative impact of artificial intelligence (AI) in finance and banking, highlighting how AI can

enhance customer support, improve security through fraud detection, and increase the accuracy of credit scoring

IJARSCT

ISSN (Online) 2581-9429

International Journal of Advanced Research in Science, Communication and Technology (IJARSCT)

International Open-Access, Double-Blind, Peer-Reviewed, Refereed, Multidisciplinary Online Journal

Volume 5, Issue 1, March 2025

www.ijarsct.co.in

Impact Factor: 7.67

through machine learning [11]. The emphasis on the value creation potential of AI in banking, including unlocking up

to $1 trillion of incremental value annually through personalized services and cost reduction via automation [11].

Finally, banks can improve customer journey analysis and the entire customer experience with API-first banking by

integrating AI and open banking. This will eventually result in innovation and industry growth.

Banking industry is poised for paradigm shift with changing customer requirements and advancements in technology.

The transformation is being ushered in by a new banking philosophy of architecture, called API-first banking, and it is

all about integration of services and open flow of data. APIs have arrived to revolutionize the way that financial

institutions construct more agile, integrated, and customer-centric services instead of monolithic bank systems that

dominated the industry previously.Customer journey analytics, previously constrained by batch processing and data silo

limitations, is now a key way of analyzing and enhancing the banking experience.Strong analytics combined with API-

first programming gives banks unparalleled chances to truly understand the demands, interests, and behavior of their

clients. Traditional transactional-based relationships can be transformed into more individualized, proactive, and

predictive services by banks because to the convergence of technology and customer information.The importance of

this change extends beyond the application of technology itself but a revolutionary change in the way banks engage

with and handle their customers. Banks must realize how API-first approaches affect customer journey analysis in order

to stay ahead of the competition and respond to their customers' mounting demands in the more digitalized financial

sector.To remain competitive and respond to growing customer demands in a burgeoning digital banking economy,

banks undergoing such development must learn how API-first practices influence customer journey analytics.

In this paper, we explore how customer journey analytics has evolved in the setting of API-first bank architectures,

covering both the technical foundations and day-to-day implications of the change. Through analysis of recent

deployments and developing trends, we examine in what ways API-first approaches are reshaping the potential of banks

to understand, serve, and anticipate customers' needs.

II. LITERATURE REVIEW

The digitalization of the financial institution has been a topic of growing interest in the literature. The article outlines

three different phases of the transformation, with each phase characterized by a collection of different challenges and

opportunities. The first phase is the digitalization of existing processes and the adoption of straightforward digital

technologies, e.g., online banking and mobile phones.

2.1 Phase 1: Basic Digital Transformation (2000-2010)

The initial stage of banking digitalization was everything about transforming legacy banking products to digital

products. During this phase, the banks were busy developing online banking websites and basic mobile apps. The phase

was marked by plain digitization of existing processes rather than a complete revamp of bank architecture. The

development of these online media, while revolutionary in their time, were made to operate in some form of silos with

little ability to provide end-to-end customer journey visibility.

2.2 Phase 2: Integrated Digital Services (2010-2018)

The second phase involved the transition to more integrated digital services. Banks began realizing the drawbacks of

siloed digital channels and turned to more integrated systems. In this phase there were middleware solutions that were

attempting to bridge the gap between traditional banking cores and new digital services. But these approaches also had

the side effect of generating complex architectural layers that, while functional, introduced new issues in data analysis

and maintenance.

2.3 Phase 3: API-First Banking (2018-Present)

The current period signifies a paradigm shift in bank system design and construction. The period is typified by

leveraging API-first systems in which interoperability and access to data is front and center at the point of inception.

This period to mark a period of bank architecture evolution from traditional to platform-type forms of it with higher

analytics of the customer journey as well as the capacity for processing in real time.

IJARSCT

ISSN (Online) 2581-9429

International Journal of Advanced Research in Science, Communication and Technology (IJARSCT)

International Open-Access, Double-Blind, Peer-Reviewed, Refereed, Multidisciplinary Online Journal

Volume 5, Issue 1, March 2025

www.ijarsct.co.in

Impact Factor: 7.67

III. RESEARCH METHODOLOGY

This study applies the qualitative approach to examine the influence of API-first banking on customer journey

analytics. This study integrates case studies and industry observer perspectives through research reports with theory to

develop a composite image of the subject.

3.1 Data Collection Methods

As this study does not involve data collection in the first place, it is founded on secondary sources of data like research

studies, whitepapers, and published case studies by financial institutions. It is rather a matter of collating what is

available in an attempt to create insights into customer journey analytics transformation in API-first banking.

3.2 Sampling Strategy

The study follows a purposive sampling method, and literature and case studies employed here are most effective in

providing the reader with comprehensive information about API-led banking innovations. One of the key selection

criteria includes digital banking transformational relevance, the manner in which APIs facilitate financial services, and

customer analytics improvement.

3.3 Analytical Framework

Thematic analysis model is applied to classify results into significant themes such as API-driven personalization, real-

time customer journey optimization, and bank experiences across devices. Application of the model aids in establishing

trends in API adoption and its impact on customers' engagement.

3.4 Validity and Reliability Measures

To provide validity and reliability, cross-checking of various sources and references from peer-reviewed journals and

industry reports of note are employed. The study is triangulated with theoretical models as well as case study

comparison to add credibility.

3.5 Ethical Considerations

Ethical concerns, given that this study does not entail human subjects or primary data, are mostly about correct citation,

avoiding bias in the choice of literature, and objectivity in framework while examining studies at hand.

IV. FINDINGS

4.1 Evolution of API-First Banking

4.1.1 Open Banking and APIs

Open Banking, facilitated by APIs, has shifted from a technical capability to a business imperative, enabling banks to

offer more agile and customer-centric services. This model encourages competition and customer engagement by

allowing customers to manage their financial affairs more effectively[12,16].

4.1.2 Digital Transformation

The integration of digital tools such as internet banking, mobile applications, and data analytics has significantly

influenced customer relationship strategies. Banks that effectively incorporate these tools into their operations are better

positioned to meet evolving customer needs, leading to improved satisfaction and loyalty[13,14].

4.2 Impact on Customer Journey Analytics

4.2.1 Enhanced Customer Engagement

The adoption of digital banking solutions, including APIs, has been positively correlated with increased customer

engagement. This is due to the convenience and personalization that digital tools offer, which are crucial for

maintaining customer satisfaction and loyalty[13,14].

IJARSCT

ISSN (Online) 2581-9429

International Journal of Advanced Research in Science, Communication and Technology (IJARSCT)

International Open-Access, Double-Blind, Peer-Reviewed, Refereed, Multidisciplinary Online Journal

Volume 5, Issue 1, March 2025

www.ijarsct.co.in

Impact Factor: 7.67

4.2.2 Data-Driven Insights

APIs enable banks to access and analyze customer data more efficiently, providing insights that can be used to tailor

services and improve customer experiences. This data-driven approach is central to the evolution of customer journey

analytics in the banking sector[16].Customer journey analytics within API-first banking represents a radical shift

towards understanding customers and customer engagement through various channels. This is driven by the need of

banks to remain current with modern customer needs and behaviors through latest technologies such as artificial

intelligence and deep learning.

4.3 Integration of Advanced Analytics

4.3.1 Deep Learning Models: Banks are employing recurrent neural networks (RNNs) to analyze customer journey

events, achieving high predictive accuracy for cross-selling opportunities. [3]

4.3.2 Channel Measurement: As customer journeys span various digital platforms, effective measurement of

interactions across these channels is crucial for optimizing marketing strategies [4].

4.4 Customer-Centric Approaches

4.4.1 Mapping Customer Journeys: Techniques like customer journey mapping help identify critical touchpoints and

improve customer satisfaction by addressing pain points [5,6].

4.4.2 Feedback Mechanisms: Continuous feedback from customers is essential for refining services and enhancing

user experiences, particularly in competitive markets like digital wallets [6].

Though technology and analytics usage are important, they have been faulted on the basis that it will overlook the

human element in banking and ultimately chase away customers who value face-to-face interaction. Blending

technology and personalized service remains a secret to banks in such a fast-changing world.Customer journey

analytics capability has followed bank architecture evolution. While early digital banking supported simple customer

interaction tracking, API-first applications of today support end-to-end journey mapping and predictive analytics.

V. THEORETICAL FRAMEWORK

5.1 API-First Architecture Principles

API-first design puts the back to basics school of banking design in style, and consumers, third-party companies, and

banks can live blissfully together. Its foundation upon modularity, scalability, and interoperability gestates innovation

and bliss. Banks become quicker to react and nimbler for evolving customer demands when they construct systems

from the bottom up by APIs rather than monolithic systems.

5.2 Customer Journey Mapping Theory

Customer journey mapping (CJM) is an API-first banking strategic methodology that comes in handy in the

examination of customer touchpoints across platforms. CJM is a critical exercise particularly in API-first banking as it

enables banks to track and optimize digital touchpoints along behavior patterns. The theory has a center stage on

seamless, personalized customer experience with APIs enabling interactions and frictionless transactions.

5.3 Digital Banking Transformation Models

Digital banking innovation models provide a systematic way of integrating digital innovations into traditional banking

platforms. Among these models, omnichannel banking, open banking, and embedded finance are of the most critical

importance. These models employ API-first methods to make the delivery of services simple so that customers enjoy

uniform and effective experiences across platforms.

5.4 Data Analytics and Predictive Modeling

In an API-first banking, predictive analytics and data analytics are paving the way for customer journey analytics to be

improved. AI and machine learning-driven analytics allow banks to predict client needs, identify fraud and enhance

service delivery. Predictive analytics also allows for transaction behavior analysis and therefore allows banks to

provide personalized financial services and solutions.

IJARSCT

ISSN (Online) 2581-9429

International Journal of Advanced Research in Science, Communication and Technology (IJARSCT)

International Open-Access, Double-Blind, Peer-Reviewed, Refereed, Multidisciplinary Online Journal

Volume 5, Issue 1, March 2025

www.ijarsct.co.in

Impact Factor: 7.67

5.5 Service Design and Delivery Framework

The core function of service design principles is to create customer-focused financial services through the integration of

API-powered capabilities. API-first banking digital solutions are easy to use, convenient, and responsive due to their

service design. As customers' behavior changes, banks can use APIs to empower a more adaptable and responsive

financial system.

5.6 Statistical Analysis Results

While no primary statistical comparison is undertaken by this research, the literature suggests that APIs-based customer

journey analytics in bank exhibit considerable difference in digital take-up, conversion as well as performance.

VI. RESEARCH GAPS AND FUTURE DIRECTIONS

Despite considerable research into the way digital banking developed, many of the key issues are poorly understood:

6.1 Long-term consequences of API-first architecture on customer satisfaction and bank performance

6.2 Challenges of incorporating API-first solutions into legacy systems

6.3 Customer journey analytics must be standardized across institutions

6.4 Impacts of increased availability of data through APIs

VII. CHALLENGES

Security Concerns: As APIs become integral to digital banking, security remains a top concern. The concept of Data

Security Operations (DataSecOps) has emerged to address these risks, emphasizing the need for collaboration among

software engineers, data scientists, and cybersecurity teams[14].Regulatory and Competitive Pressures: Regulatory

frameworks like the Revised Payment Services Directive (PSD2) have accelerated the need for banks to open their

systems, fostering a competitive environment that requires continuous innovation and adaptation[12,15].

VIII. CONCLUSION

API-first banking is reshaping the financial landscape by enhancing customer journey analytics and fostering a more

connected and innovative ecosystem. While this approach offers significant opportunities for improved customer

engagement and service personalization, it also presents challenges, particularly in terms of security and regulatory

compliance. As the banking sector continues to evolve, the symbiotic relationship between Open Banking and the API

economy will be crucial in driving future innovations and maintaining a customer-centric focus[12,14,16].API-first

banking has introduced standardized trend adoption, including open banking platforms, microservices architecture, and

event-driven APIs. These trends offer flexible and scalable banking solutions with the promise of higher customer

engagement via digital channels. Studies indicate that API-first banking enhances the robustness of fintech solution

integrations, which ensures real-time data exchange and embedded finance functionality. This has introduced increased

service agility and a broader financial services ecosystem. Customer journey analytics in API-first banking have been

designed to leverage real-time data to create hyper-personalized financial experiences. The findings show that

customers increasingly expect contextualized interactions, and hence the banks must fine-tune API design for higher

personalization. API-first banking has been found to bring improvements in key performance metrics, including

reduced transaction processing time, increased user engagement, and improved service reliability. Such improvements

translate to improved customer satisfaction and loyalty. Comparative benchmarking with other types of financial

institutions shows the effects of API-driven innovation in a differentiated customer journey. With banks increasingly

'API-first, digital-native banking has employed 'API ecosystems for better agility along with a more personalized

experience. It entails extensive theoretical and analytical research on the API-first banking revolution of customer

journey analytics. It provides important insights regarding the future of digital banking as well as customer experience

strategy by bridging real-time data with insights derived from nascent trends. It is through the potential to make real-

time, data-informed decisions that drive personalization and deliver frictionless cross-channel experiences that API-first

banking has revolutionized customer journey analysis. The research contends that financial ecosystems facilitated by

APIs provide banks dynamism to innovate, bring on board new services at affordable costs, and manage increasing

customers' expectations. Second, the integration of predictive analytics with machine learning through API-first

IJARSCT

ISSN (Online) 2581-9429

International Journal of Advanced Research in Science, Communication and Technology (IJARSCT)

International Open-Access, Double-Blind, Peer-Reviewed, Refereed, Multidisciplinary Online Journal

Volume 5, Issue 1, March 2025

www.ijarsct.co.in

Impact Factor: 7.67

architectures has enhanced the ability of banks to forecast the needs of clients and facilitate models of engagement.

Microservices structure and open banking initiatives also help enable API-first banking as the core component of digital

transformation and hence make the financial environment responsive and integrated. As there is additional development

within the banking sector, banks with API-first approaches will be better positioned to outcompete with better customer

experiences, greater operating efficiencies, and fintech partnerships. Future studies can also examine the long-term

impact of API-first banking on regulatory compliance, cybersecurity, and financial inclusion worldwide.

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ResearchGate has not been able to resolve any citations for this publication.

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Article

Mar 2022

Consumers’ needs have changed significantly in recent years, and so have their expectations of financial services. Not only does a large part of their life take place online, but digital apps and products are also integrated into everyday situations. Instead of offering isolated products on a website, companies therefore began to address consumers right at their ‘point of need’ — on e-commerce platforms, in apps from mobility service providers or on comparison portals. Banks can adopt this approach by embedding financial services into the products of non-bank companies, thus offering seamless processes and an increased level of convenience to their clients. Open banking is what provides the foundation for this concept of ‘embedded finance’, by allowing third parties to access banking data via technical interfaces — so-called application programming interfaces (APIs). In 2015, Deutsche Bank decided to take advantage of the opportunities offered by open banking. Through an API programme, the bank enables its partners and customers to integrate banking data as well as financial products and services into their own applications and products. Thus, partners can offer financial services to their customers directly at the point of need. The work of Deutsche Bank’s API Program has provided valuable insights into how banks can successfully open up and even take the next steps towards embedded finance. This paper looks at Deutsche Bank’s experience with open banking and the possibilities and opportunities for embedded finance and presents best practice examples for the necessary internal transformation of financial institutions.

API deep dive: Who will thrive in an open banking world? Why meeting regulatory requirements is not enough for banks to remain relevant

Article

Feb 2018

Matthias Kröner

Forthcoming regulatory changes in Europe and UK represent a significant opportunity for banks to implement new digital strategies. With the update to the Payment Services Directive (PSD2) having come into force in January 2018, changes to the way customer data are processed and shared with third parties are underway. Application programming interfaces (APIs), will be the digital tools that usher in this new age of customer convenience. Fidor has leveraged APIs for over six years. This paper shares this experience with banks that wish to become more open. It will look at the role APIs are set to play in the open banking world, and how they will dictate which organisations will prosper.

Enhancing Customer Experience: Exploring Deep Learning Models for Banking Customer Journey Analysis

Chapter

Feb 2024

Customer journey analytics is the process of monitoring and analyzing how customers use combinations of points of contact, services, or products to interact with an organization. Companies use customer journey analytics because it is one of the most effective ways to increase long-term customer value, improve customer loyalty, and drive revenue growth. Customer journey analysis provides teams with a window on customer behavior that provides valuable information that they can then use to inform their decisions. These points of contact are called events and they define the customer’s behavioral model across an organization. In a typical big bank, about 100,000 events are carried out per second. Several dynamic events are associated with a bank such as an ATM withdrawal, a POS transaction, a cash deposit. This series of customer journey events can be used for different use cases such as cross-selling, account reactivation, hard rolling, soft rolling to name a few. This paper uses deep neural network-based, recurrent neural network (RNN) algorithm to capture these customer journey events across a bank and how these events can be used to predict cross-sell propensity for other bank products. We developed various RNN models using both time series and static data layers to estimate the likelihood of cross-selling credit card facility to existing customers on hypothetical dataset. A highly predictable model is developed with an AUC of 0.92 on training and 0.90 on validation sample. This model can capture around 91% of the cross-sell events in first two deciles for training sample, indicating that by targeting a small proportion of the portfolio, a bank can achieve maximum conversions from cross-sell programs.

Digital Financial Services and Open Banking Innovation: Are Banks Becoming ‘invisible’?

Article

May 2023

Digitalization in many economic sectors drove the financial system to adapt to new paradigms of technological transformation. Moreover, the extant regulatory framework forced the financial system to reconsider its business models and its relationship with the market. Such reasons generated also in the banking sector a new model of competition within the ecosystem never seen before in this sector. The new ecosystem of banks and financial institutions lacks a common framework that not only synthesizes the development lines of open innovation in the banking sector but also regarding the planification of strategic choices and organization within the new ecosystems. The present study aims to inquire into the strategic positioning of European banks toward their digital transformation strategies, by analysing the decision-making processes that occurred between 2015 and 2022. A qualitative analysis of partnerships and the adoption of Application Programming Interfaces (APIs) development in support of new service models was carried out. Results have relevant policy implications for regulators, linked to the business evolution and the risks of outsourcing, and managerial implications for the followers, specifically on the plan of service integration to diversify and boost their activities in the segment of customer relationship management and care, providing a better user experience.