Backbase seeks to usher in a new era of engagement banking with its Grand Central platform and Azure API Management

Driving the future of banking

For 20 years, Backbase has empowered banks and credit unions to drive the future of banking. It offers IT solutions that help banks go beyond traditional banking models toward a new way of operating called engagement banking.

Engagement banking represents a paradigm shift in the customer banking experience. Instead of designing the customer experience around banking services, it reimagines the banking services tailored to meet the customer’s needs. That usually means offering financial technology (fintech) capabilities, like live chats, peer-to-peer payments, or digital wallets through the bank’s app or website.

To realize this vision, these services require integration with various back-end systems within the bank, including core banking systems, CRM systems, payments processing tools, and other fintech solutions. Backbase, a Microsoft partner, plays a pivotal role in facilitating these integrations. “Customer expectations are always changing, and banks need to keep up, which is usually by using third-party fintech integrations. Our engagement banking platform helps banks integrate those cutting-edge services without affecting things behind the scenes,” says Roland Booijen, General Manager of Ecosystems at Backbase. 

However, as banks accumulate these integrations over time, the need for modernization becomes increasingly apparent. Despite the benefits of modernizing the banking core to meet customer expectations, the process poses significant risks and expenses not all banks are willing to take.  

The risk and expense of modernization

The reluctance to embark on the modernization journey stems from the substantial investment and potential disruptions to customer service. Though on-premises stacks can be cumbersome and inefficient, undergoing a full digital transformation would require a massive overhaul that runs the risk of downstream effects on customer service. 

Jeroen Unger, Director of Global Alliances at Backbase, underscores the hesitation among banks, particularly large banks, to commit to modernization endeavors. “It’s a multi-million-dollar exercise for banks to modernize their core. And for large banks, it could even be hundreds of millions of dollars and a multi-year effort. So, lots of banks are hesitant to go on that modernization journey to the cloud or even to a newer core.” 

Deepak Pandey, Director of Technology - Ecosystems at Backbase, added that API management is especially ready for a revamp when it comes to banking operations. “Most modernization concerns are API-driven,” says Pandey. “It’s things like API readiness, orchestration, and offering those APIs in a way where the downstream systems that are backed by those APIs can change over time without disrupting the customer-facing channels.” 

To help banks on their modernization journey, Backbase needed to create a solution that could be cost-effective and simple to integrate. 

A grand solution

Having already spent decades empowering banks through its engagement layer offerings, Backbase is aiming to help banks get more out of their existing systems with its new integration platform as a service (iPaaS): Grand Central.
According to Pandey, building on the engagement layer with an integration platform was a natural next step for Backbase. “We wanted to take engagement banking to the next level and simplify the enterprise integration layer to allow innovation without worrying about what downstream modernization is happening in the bank, which is why we created Grand Central,” he explains.

Grand Central is a single integration platform for banks and their API needs. Its plug-and-play architecture enables instant integration with a robust ecosystem of core banking systems and fintech solutions at low development and maintenance costs. “We’re creating that layer in their architecture between their legacy tech stack and their modern platforms, which allows them the opportunity to progress on their modernization journey at their own pace with their back ends,” says Booijen.

Grand Central works as an industrialized middle layer, sitting between the customer-facing front-end and complex back-end systems. Using the Banking Industry Architecture Network (BIAN) domain model, it seamlessly connects any channel application to various downstream systems necessary for banking, like core banking platforms, CRM systems, payment systems, and other fintech services. Powered by Azure API Management, Grand Central offers a unified API management layer, ensuring standardized integration across a bank’s multiple systems using a standardized interface. In general, third-party APIs tend to follow different specifications, so Grand Central unifies the data sources into one model and makes sure every API is routed to the right connector. It also abstracts the reusable integration code into a separate model, which allows banks to tackle modernization in smaller, separate chunks that don’t run the risk of disrupting customer-facing services.

Backbase anticipates the transformative potential of Grand Central in an industry characterized by apprehension toward change. Pandey explains, “With the Grand Central platform, you get an iPaaS installed on Azure, which has the API management layer built in and the integration platform built in. This gives banks a future platform to create and innovate more API-based modernization. And not just with our connectors, but with any integration in the bank, whether internal or external channels—this is the future of open banking.” 

The Azure API Management advantage

As the Backbase team set out to find the right vendor for its API management layer, a few things about Microsoft stood out. “What we really liked about Azure API Management was that it matched everything we were asking for in a solution, and it natively fit well into our Azure stack,” says Pandey. 

The inclusion of Azure API Management in Grand Central gives banks full control over their API lifecycles. Developers can design and develop, secure, monitor, and publish new APIs all from within the single integration layer, significantly reducing the time and cost of building new integrations. These features essentially come out of the box, but Backbase and Microsoft are pushing the use of API Management in new and exciting ways. 

“When building Grand Central, we recognized a huge need for operationalizing through a controlled CI/CD process. We wanted to create a solution where an API could be deployed in a highly secured and controlled manner—and of all the vendors out there, Microsoft immediately recognized this as an important need,” says Pandey.

When a bank wants to introduce an API management solution into its architecture, it typically requires a lot of processes to establish the API management tooling and usually with help from a third-party vendor. But with Grand Central and API Management, all of the automation and software development lifecycle (SDLC) processes are built in from day one, requiring very little investment time for set up. Pandey estimates this could save banks six months to a year in time and resources spent bringing new software into the organization. This creates the potential for banks to open up their ecosystems to other third-party software they’re interested in while still getting value from their existing technology investments. 

Additionally, Backbase uses Azure Kubernetes Service to host integration platform connectors, which are the Java workloads running on Kubernetes, and Azure Service Bus for syncing financial data to the Dataverse. Together, the unified banking APIs are served via Azure API Management, which routes incoming requests to the appropriate connector workloads running on Azure Kubernetes Service, allowing Backbase to manage integrations as microservices securely. ”Azure API Management ticks all the boxes of a great API lifecycle management software. With our combined efforts, we have created deep integration with Kubernetes-based back ends using state-of-the-art GitOps tooling,” says Pandey. 

A seamless partnership

The Backbase team credits the willingness of Microsoft to experiment with its own software as a major benefit to Grand Central. “We got access to top engineers, and we worked side by side. We came to the table with our own expertise, and they came with their experts from the domain and technical sides, making the coengineering seamless,” says Unger.

Working with Microsoft also brings necessary benefits like industry-leading security, which is crucial for a highly regulated industry like banking. “Whenever you bring any technology or process into a bank, it needs to be highly compliant in terms of security, uptime SLAs, disaster recovery, etc. And having that assurance from Microsoft is really valuable for any business in the financial services,” Unger continues. 

Pandey has found Credential Manager in API Management to be a standout feature. By providing a central place within the integration platform to manage credentials, security managers can securely authenticate all their vendors from a single point. “For a system like ours, which stores and connects hundreds of vendors out there, having a feature like Credential Manager is super important,” he says. 

Looking to the future

Looking ahead, Backbase envisions leveraging AI to automate integration processes further. “The heart of Grand Central is to make it as easy as possible to create new connections or integrations that anyone can do. And the way we’ve structured our connectors is based on the idea that a lot of this will be automated through AI in the future. For integration engineers, data mapping is a time-intensive task, and we’re currently exploring how to build AI-assisted integrations so engineers and business analysts can instead use that time to create new products and services,” says Pandey. 

With two decades of experience in shaping the future of banking, Backbase remains dedicated to revolutionizing the financial industry through transformative solutions like Grand Central.

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