By Roy Urrico
Credit unions no longer need to struggle to manage the interaction of fintechs, open banking and application programming interfaces (APIs). Data integration firm NXTsoft recently announced a zero-integration effort called Connectivity as a Service (CaaS)for financial institutions and fintechs.
The Birmingham, Ala.-based NXTsoft, which focuses on data connectivity, analytics, management and migration, plans to accelerate the leveraging APIs to automate and easily access data through this new connectivity service.
NXTsoft pointed out with major core processors such as Jack Henry & Associates announcing plans to “unbundle” core system components, as they prepare for implementation of Section 1033 in the Dodd-Frank legislation, financial institutions can accelerate the speed of digital transformation without allocating staff while accomplishing it more affordably.
Section 1033 grants consumers rights to access information about financial accounts and contemplates rulemaking by the Consumer Financial Protection Bureau (CFPB) to develop regulations to implement this section. However, the timeline for this rule keeps shifting, and now looks more likely for a 2023 enactment.
Anticipating Section 1033 Changes
Core providers continue to anticipate the Section 1033 implementation and proceed with changes to separate out once amalgamated software. Therefore credit unions and banks have more flexibility than ever before to design the specific digital presence that will best serve the needs of their market.
NXTsoft noted in a press release though that core providers may be unbundling software components and providing the openness to connect to their systems, they do not provide the actual connectivity. Core providers and fintechs have built the solutions and the financial institutions want to take advantage, but they are not exactly sure how to get there.
“If a financial institution tries to put multiple disparate systems together and build and maintain connectivity, not to mention security, they start to become an IT business, which just doesn’t make sense for a $300-400 million institution,” said David Brasfield, CEO of NXTsoft. “IT and connectivity are not a financial institution’s expertise and focus. They just want to be banks and credit unions and that is where NXTsoft steps in with Connectivity as a Service and helps to get them where they want to go, while they continue to focus on banking,” he said.
NXTsoft’s Connectivity as a Service maps, implements, maintains, secures and services connectivity between a financial institution and the multiple ancillary components it wants to incorporate. NXTsoft works with an institution’s selected fintech vendors to ensure that systems transfer data exactly as they should, removing this headache from the financial institution.
“NXTsoft’s Connectivity as a Service takes the hassle and pain out of taking advantage of this new open, composable market and does it simply and easily,” said Brasfield. “We empower institution to be nimble and agile, unencumbered by legacy technology,” he said.
Opening Banking
If a financial institution elects to take a detour, meaning change core providers or select a different ancillary component, by using another company feature NXTsoft’s Software as a Service (SaaS) infrastructure, they own the road and therefore can easily change directions without losing valuable time or money.
Prior to open banking, third-party developers wanting to connect products to a financial institution’s infrastructure usually had to go through one of the leading core providers and anything that connected to those systems. “If you had a product you wanted to connect to the bank (or credit union), you had to deal with one of those providers,” Brasfield told Finopotamus in December, 2021.
The NXTsoft CEO explained, “We provide a bridge API into those core systems. If you are a fintech player, and you need to connect into a Jack Henry system or an FIS system, we have a bridge that connects directly to that core system.” Brasfield added that NXTsoft is then able to take the information — such as loan, general ledger or transactional data − and connect that to the third-party application.
In September 2021, NXTsoft announced its OmniConnect standard API solution, which provides connectivity for any U.S. financial institution to any third-party system with a singular API, plus the ability for fintechs to write directly to NXTsoft’s OmniConnect platform. Its growing list of partners includes Kasasa, Abrigo, ICE Mortgage Technology, and BankPoint.
NXTsoft delivers connectivity to over 700 financial institutions, including 230 credit unions, with 2,000 connections in place. The company provides links to 44 active partners through the use of its open API platform. They have connected with financial services systems, customer relationship management (CRM) platforms and other banking systems.