A Forrester Total Economic Impact™ Study Commissioned By FIS, April 2024
Many financial institutions face a critical challenge in evolving operations to meet modern customer expectations or they risk being outperformed in a landscape dominated by innovation and nimble, adaptive competitors. Modern application programming interface (API) ecosystems facilitate this transformation by streamlining complex API integrations, efficiently enhancing security measures, and enabling organizations to phase out obsolete systems. API ecosystems not only accelerate the delivery of new services, but they also unlock significant revenue opportunities, which can enable institutions to swiftly respond to emerging financial trends and customer needs.
FIS Code Connect is a modern API ecosystem tailored to optimize the integration of financial services for organizations of varying scales. It provides an extensive suite of tools, including robust developer documentation, interactive testing environments, and a broad selection of FIS proprietary and curated third-party APIs. This platform streamlines the entire development lifecycle, enhances security protocols, and facilitates compliance with evolving regulations. Code Connect not only simplifies the introduction of new financial services, but it also enables institutions to swiftly adapt to market shifts and compliance demands to help them remain competitive in a dynamic financial landscape.
FIS commissioned Forrester Consulting to conduct a Total Economic Impact™ (TEI) study and examine the potential return on investment (ROI) enterprises may realize by deploying Code Connect.1 The purpose of this study is to provide readers with a framework to evaluate the potential financial impact of Code Connect on their organizations.
To better understand the benefits, costs, and risks associated with this investment, Forrester interviewed six representatives of four organizations with experience using Code Connect. For the purposes of this study, Forrester aggregated the interviewees’ experiences and combined the results into a single composite organization that is in financial services and has assets totaling $20 billion, annual revenue of $500 million, and eight developers supporting 50 APIs.
Interviewees said that prior to using Code Connect, their organizations struggled with slow and cumbersome integration processes for financial services and often relied on outdated legacy systems. However, prior attempts yielded limited success, which left them with fragmented systems, inconsistent API interfaces, and prolonged development cycles. These limitations led to increased operational costs, reduced market responsiveness, and significant security and compliance challenges.
The interviewees reported that after investing in Code Connect, their organizations saw transformative improvement in their ability to integrate financial service capabilities rapidly and securely. Key results from the investment include expanded revenue opportunities, faster time to market, improved customer experience, enhanced developer productivity, a reduction in legacy costs, and an improvement in security posture.
Quantified benefits. Three-year, risk-adjusted present value (PV) quantified benefits for the composite organization include:
Unquantified benefits. Benefits that provide value for the composite organization but are not quantified for this study include:
Costs. Three-year, risk-adjusted PV costs for the composite organization include:
The representative interviews and financial analysis found that a composite organization experiences benefits of $946,000 over three years versus costs of $323,000, adding up to a net present value (NPV) of $623,000 and an ROI of 193%.
Return on investment (ROI)
Benefits PV
Net present value (NPV)
Payback
From the information provided in the interviews, Forrester constructed a Total Economic Impact™ framework for those organizations considering an investment in FIS Code Connect.
The objective of the framework is to identify the cost, benefit, flexibility, and risk factors that affect the investment decision. Forrester took a multistep approach to evaluate the impact that Code Connect can have on an organization.
Interviewed FIS stakeholders and Forrester analysts to gather data relative to Code Connect.
Interviewed six representatives at four organizations using Code Connect to obtain data about costs, benefits, and risks.
Designed a composite organization based on characteristics of the interviewees’ organizations.
Constructed a financial model representative of the interviews using the TEI methodology and risk-adjusted the financial model based on issues and concerns of the interviewees.
Employed four fundamental elements of TEI in modeling the investment impact: benefits, costs, flexibility, and risks. Given the increasing sophistication of ROI analyses related to IT investments, Forrester’s TEI methodology provides a complete picture of the total economic impact of purchase decisions. Please see Appendix A for additional information on the TEI methodology.
Readers should be aware of the following:
This study is commissioned by FIS and delivered by Forrester Consulting. It is not meant to be used as a competitive analysis.
Forrester makes no assumptions as to the potential ROI that other organizations will receive. Forrester strongly advises that readers use their own estimates within the framework provided in the study to determine the appropriateness of an investment in Code Connect.
FIS reviewed and provided feedback to Forrester, but Forrester maintains editorial control over the study and its findings and does not accept changes to the study that contradict Forrester’s findings or obscure the meaning of the study.
FIS provided the customer names for the interviews but did not participate in the interviews.
Consulting Team:
Kris Peterson
Rachel Ballard
Role | Industry | Region | Assets | Revenue | Applications supported |
---|---|---|---|---|---|
Chief operating officer IT operations manager |
Regional banking |
North America |
$1B |
$16M |
<10 |
Director of engineering Software development manager |
Financial services |
North America |
$14B |
$330M |
30+ |
Software engineering manager | Regional banking | North America | $23B | $341M | 70+ |
Director of application services Chief systems officer |
Regional banking |
North America |
$24B |
$655M |
60+ |
Prior to implementing Code Connect, interviewees’ organizations faced significant hurdles with manual and cumbersome integration processes that hampered their operations. The dependency on a variety of legacy systems and an assortment of third-party APIs resulted in fragmented technology landscapes, leading to inconsistent and inefficient development practices. These outdated methods not only drained resources, but they also lacked the necessary flexibility to swiftly adapt to evolving market demands and complex regulatory requirements. Such challenges severely impacted the ability of the institutions to maintain their competitive edge and operational efficiency.
The interviewees noted how their organizations struggled with common challenges, including:
Based on the interviews, Forrester constructed a TEI framework, a composite company, and an ROI analysis that illustrates the areas financially affected. The composite organization is representative of the six interviewees, and it is used to present the aggregate financial analysis in the next section. The composite organization has the following characteristics:
Description of composite. The financial services organization has $20 billion in assets and generates $500 million in annual revenue. A team of eight developers supports 50 APIs.
Ref. | Benefit | Year 1 | Year 2 | Year 3 | Total | Present Value |
---|---|---|---|---|---|---|
Atr | Increased developer productivity | $139,320 | $139,320 | $139,320 | $417,960 | $346,468 |
Btr | Increased productivity of IT security personnel | $105,975 | $105,975 | $105,975 | $317,925 | $263,544 |
Ctr | Reduced legacy costs | $135,000 | $135,000 | $135,000 | $405,000 | $335,725 |
Total benefits (risk-adjusted) | $380,295 | $380,295 | $380,295 | $1,140,885 | $945,737 | |
Evidence and data. Interviewees told Forrester that Code Connect improved the productivity of their organization’s developer teams by simplifying development processes and the integration of APIs.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. This benefit can vary across organizations due to differences in:
Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $346,000.
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|
A1 | Developer team members | Composite | 8 | 8 | 8 | |
A2 | Productivity improvement with Code Connect | Interviews | 20% | 20% | 20% | |
A3 | Fully burdened annual salary for a developer | TEI standard | $129,000 | $129,000 | $129,000 | |
A4 | Productivity recapture | TEI standard | 75% | 75% | 75% | |
At | Increased developer productivity | A1*A2*A3*A4 | $154,800 | $154,800 | $154,800 | |
Risk adjustment | ↓10% | |||||
Atr | Increased developer productivity (risk-adjusted) | $139,320 | $139,320 | $139,320 | ||
Three-year total: $417,960 | Three-year present value: $346,468 |
Evidence and data. Interviewees reported that Code Connect streamlines the workloads of IT security teams by providing a robust, standardized security framework and ensuring compliance with current API standards. They explained that this reduces or eliminates the need for audits and allows security measures to be consistently applied across new operations.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. The value of this benefit can vary across organizations due to differences in:
Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $264,000.
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 |
---|---|---|---|---|---|
B1 | IT security FTEs saved with Code Connect | Interviews | 1 | 1 | 1 |
B2 | Fully burdened average annual salary for an IT security FTE | TEI standard | $157,000 | $157,000 | $157,000 |
B3 | Productivity recapture | TEI standard | 75% | 75% | 75% |
Bt | Increased productivity of IT security personnel | B1*B2*B3 | $117,750 | $117,750 | $117,750 |
Risk adjustment | ↓10% | ||||
Btr | Increased productivity of IT security personnel (risk-adjusted) | $105,975 | $105,975 | $105,975 | |
Three-year total: $353,250 | Three-year present value: $263,544 |
Evidence and data. Interviewees offered some examples of how Code Connect allowed their organizations to decommission some legacy solutions and reduce expenditures on third-party services.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. This benefit can vary across organizations due to differences in:
Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $336,000.
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 |
---|---|---|---|---|---|
C1 | Cost savings from decommissioned legacy solutions | Composite | $100,000 | $100,000 | $100,000 |
C2 | Cost savings from reduced security and other professional services | Composite | $50,000 | $50,000 | $50,000 |
Ct | Reduced legacy costs | C1+C2 | $150,000 | $150,000 | $150,000 |
Risk adjustment | ↓10% | ||||
Ctr | Reduced legacy costs (risk-adjusted) | $135,000 | $135,000 | $135,000 | |
Three-year total: $405,000 | Three-year present value: $335,725 |
Interviewees mentioned the following additional benefits that their organizations experienced but were not able to quantify:
The value of flexibility is unique to each customer. There are multiple scenarios in which a customer might implement Code Connect and later realize additional use cases and business opportunities, including:
Flexibility would also be quantified when evaluated as part of a specific project (described in more detail in Appendix A).
Ref. | Cost | Initial | Year 1 | Year 2 | Year 3 | Total | Present Value |
---|---|---|---|---|---|---|---|
Dtr | Code Connect fees | $22,000 | $121,000 | $121,000 | $121,000 | $385,000 | $322,909 |
Total costs (risk-adjusted) | $22,000 | $121,000 | $121,000 | $121,000 | $385,000 | $322,909 | |
Evidence and data. Interviewees said their organizations paid fees to FIS for support in implementing APIs and other usage charges related to API calls. Their initial fees averaged $20,000, and their ongoing fees averaged $110,000 per year.
Modeling and assumptions. Based on the interviews, Forrester assumes the following for the composite organization:
Risks. Fees paid to Code Connect can vary across organizations due to differences in:
Results. To account for these risks, Forrester adjusted this cost upward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $323,000.
Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|---|
D1 | One-time fees | Interviews | $20,000 | $0 | $0 | $0 | |
D2 | Recurring fees | Interviews | $0 | $110,000 | $110,000 | $110,000 | |
Dt | Code Connect fees | D1 | $20,000 | $110,000 | $110,000 | $110,000 | |
Risk adjustment | ↑10% | ||||||
Dtr | Code Connect fees (risk-adjusted) | $22,000 | $121,000 | $121,000 | $121,000 | ||
Three-year total: $385,000 | Three-year present value: $322,909 |
The financial results calculated in the Benefits and Costs sections can be used to determine the ROI, NPV, and payback period for the composite organization’s investment. Forrester assumes a yearly discount rate of 10% for this analysis.
These risk-adjusted ROI, NPV, and payback period values are determined by applying risk-adjustment factors to the unadjusted results in each Benefit and Cost section.
Initial | Year 1 | Year 2 | Year 3 | Total | Present Value | |
---|---|---|---|---|---|---|
Total costs | ($22,000) | ($121,000) | ($121,000) | ($121,000) | ($385,000) | ($322,909) |
Total benefits | $0 | $380,295 | $380,295 | $380,295 | $1,140,885 | $945,737 |
Net benefits | ($22,000) | $259,295 | $259,295 | $259,295 | $755,885 | $622,828 |
ROI | 193% | |||||
Payback | 14 months | |||||
Total Economic Impact is a methodology developed by Forrester Research that enhances a company’s technology decision-making processes and assists vendors in communicating the value proposition of their products and services to clients. The TEI methodology helps companies demonstrate, justify, and realize the tangible value of IT initiatives to both senior management and other key business stakeholders.
Benefits represent the value delivered to the business by the product. The TEI methodology places equal weight on the measure of benefits and the measure of costs, allowing for a full examination of the effect of the technology on the entire organization.
Costs consider all expenses necessary to deliver the proposed value, or benefits, of the product. The cost category within TEI captures incremental costs over the existing environment for ongoing costs associated with the solution.
Flexibility represents the strategic value that can be obtained for some future additional investment building on top of the initial investment already made. Having the ability to capture that benefit has a PV that can be estimated.
Risks measure the uncertainty of benefit and cost estimates given: 1) the likelihood that estimates will meet original projections and 2) the likelihood that estimates will be tracked over time. TEI risk factors are based on “triangular distribution.”
The initial investment column contains costs incurred at “time 0” or at the beginning of Year 1 that are not discounted. All other cash flows are discounted using the discount rate at the end of the year. PV calculations are calculated for each total cost and benefit estimate. NPV calculations in the summary tables are the sum of the initial investment and the discounted cash flows in each year. Sums and present value calculations of the Total Benefits, Total Costs, and Cash Flow tables may not exactly add up, as some rounding may occur.
Related Forrester Research
Banks Must Wake Up To A New Customer: The Developer, Forrester Research, Inc., May 21, 2020.
The Forrester Guide To Technical Debt, Forrester Research, Inc., April 27, 2022.
Growing Deposits By Going Beyond Offering Great Rates, Forrester Research, Inc., November 8, 2023.
1 Total Economic Impact is a methodology developed by Forrester Research that enhances a company’s technology decision-making processes and assists vendors in communicating the value proposition of their products and services to clients. The TEI methodology helps companies demonstrate, justify, and realize the tangible value of IT initiatives to both senior management and other key business stakeholders.
2 Source: Envisioning End-To-End Process Redesign In Financial Services, Forrester Research, Inc., March 17, 2022.
3 Source: The Future Of Fintech, Forrester Research, Inc., January 5, 2024.
4 Source: Four Ways APIs Are Changing Banking, Forrester Research, Inc., October 24, 2018.
5 Source: Consumer Banking Trends, 2024, Forrester Research, Inc., January 17, 2024.
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