The API-Driven Bank: Why the Future of Business Banking Lies in Ecosystem Thinking

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The API-Driven Bank: Why the Future of Business Banking Lies in Ecosystem Thinking

For decades, banks operated as monolithic institutions, offering businesses a rigid suite of financial products—loans, deposits, FX, and payments—all within their proprietary ecosystems. But the era of the all-in-one bank is over. Fintech challengers and brokers have steadily eroded the dominance of traditional banks in business banking by offering highly specialised, data-driven services that are more convenient, efficient, and cost-effective for SMEs.

Now, as we look ahead to 2025, one thing is clear: the future of business banking is no longer about banks trying to do everything themselves. Instead, it lies in ecosystem thinking—the ability to seamlessly integrate, embed, and orchestrate financial services through APIs, offering a unified experience that puts the customer first.

The Fragmentation of SME Banking

The SME banking landscape has become increasingly fragmented. Today, a small business might use a high-street bank for deposits, a fintech lender for credit, a separate provider for FX and international payments, and a cashflow management app for forecasting. The result? A disconnected and inefficient financial management experience.

A survey from Codat highlights that 7 out of 10 businesses now have multiple bank accounts and only source 63% of their financial services from their primary institution. This fragmentation causes problems for businesses. 60% of SMEs consider system integrations a key factor in choosing financial services providers, highlighting the demand for a more unified approach.

Fintechs and brokers have driven this fragmentation. But instead of competing directly with fintechs, banks must shift their mindset—from being product providers to being the financial operating system for SMEs. This is where API-driven banking comes in.

APIs: The Glue That Holds Business Banking Together

Application Programming Interfaces (APIs) are the foundation of the next generation of banking. They allow different financial services to communicate, share data, and function as part of a seamless digital experience. Rather than forcing SMEs to juggle multiple apps and interfaces, an API-driven bank can integrate third-party fintech solutions directly into its platform, becoming the hub for all financial activities.

“SMEs don’t want 10 different finance apps—they want one banking partner that does it all,” Carl Hasty, CEO of CoBa, a leading fintech that helps Tier 1 banks reclaim business banking revenue. “Banks that embrace API-driven ecosystems will not only improve customer retention but also create new revenue streams by monetising their platform capabilities.”

How Banks Can Win With an API-First Strategy

To succeed in 2025 and beyond, banks must evolve from being just financial service providers to becoming platform orchestrators. Here’s how:

1. Integrate Third-Party Solutions Banks should not fear fintechs—they should partner with them. By leveraging APIs, banks can embed best-in-class fintech services, such as automated FX trading, invoice financing, or AI-powered cashflow forecasting, directly into their digital platforms. In fact, 59% of businesses are aware that fintechs offer treasury services that could reduce their reliance on banks, and 44% have considered switching to fintechs in the past year, according to Accenture.
2. Offer a Unified SME Dashboard Imagine a bank’s SME customer logging into their account and seeing all their financial data in one place: real-time cashflow insights, upcoming invoices, automated payment scheduling, and integrated FX risk management. This all-in-one experience will be the defining competitive edge in SME banking. Notably, Accenture found that 50% of business customers want value-added services, including real-time insight into cashflow, reinforcing the demand for comprehensive, data-driven solutions.
3. Monetise Platform Capabilities API-driven banks can create new revenue models by offering premium integrated services for a fee – or offering them for free with the confidence that they will drive engagement with their existing transaction-based product offerings.
4. Leverage Open Accounting and Open Banking APIs that connect with accounting software, tax platforms, and ERP systems can make banking services smarter and more contextual. By tapping into a business’s financial health in real time, banks can offer proactive lending, automated compliance, and more tailored financial products. A Codat survey found that 84% of businesses believe that the ability to automatically share financial data with their bank would improve their operational efficiency, underscoring the importance of API integration.

Lloyds Bank: A Case Study in API-Driven Transformation

Lloyds Bank, through its collaboration with CoBa, has already begun moving toward an API-first approach. By integrating a white-labelled commercial banking platform powered by CoBa, Lloyds has launched a new fully-digital FX hedging service to its customers that allows businesses to see cash flow forecasts and auto-hedge invoices pulled directly from their accounting software. That’s functionality the fintechs don’t have and it’s enabled Lloyds to reverse the trend of recent years. They’re now winning back customers from Tier 1 competitors and fintechs like Wise as a result of taking this API-driven approach. 

This shift is not just about technology; it’s about strategy. Banks that embrace ecosystem thinking will stay relevant, while those that resist risk becoming little more than regulated deposit holders, losing the most valuable SME relationships to fintech disruptors.

The Future: Banks as the Financial OS for SMEs

As 2025 approaches, banks have a choice: continue competing in an outdated, siloed model, or embrace API-driven ecosystems that put the customer at the centre. The winners will be those that transform from static service providers into dynamic platforms, seamlessly integrating fintech innovation while maintaining the trust and stability that businesses expect from their banking partners.

“The battle for SME banking isn’t about who offers the best standalone product,” says CoBa’s team. “It’s about who delivers the best overall experience. And that experience will be API-driven.”

The future of banking is a race to become the Financial OS for businesses. The question is: which banks are ready to make the leap?

By Carl Hasty, CEO and Co-Founder, CoBa

Download your free copy of the latest Financial Technologist magazine here.