Tech Talks

How Does the Fintech and Banking Sector Use APIs for A Better Outcome!

August 8th, 2022 Tech Talks

For years, when the global banking sector was dealing with complexities in operations – it was fintech companies that reframed the entire scenario with modern technologies. Yes, they used APIs to make a way for banks and other institutions. 

These APIs get fixed into any third party application creating a series of services letting the user’s financial data more accessible. They have also inspired the fintech companies to serve the financial sector in many ways with transparency in services for the account holder.

Well, all these sound cool right – But I know this might interest you to know more about them.

So, with no delay let’s get started!

What is API in Banking? – An Introduction!

The banking APIs are the set of protocols that tell the banking companies how to interact among themselves to make the banking process easy. 

api in banking

If we talk about the backend, these APIs connect the developers to the payment networks to display billing details. This in turn gets them converted into a necessary tool when it comes to BaaS (Bank as a services).

What is API in Fintech?

An API in Fintech is a program that’s used to interact with a financial institution’s server. They allow the fintech and financial services to interact with each other by enabling them to access as well as exchange the information.

Well, where the above data about the notion of APIs in both the fintech and banking sector would have gotten you some understanding of the concept,  now let’s see how these APIs benefit them in further run.

How APIs Benefit Fintech and Banking Sector – A Study!

If you look around, you can see that every other industry directly or indirectly makes use of banks and their APIs.

So, let’s have a check with some of the benefits that they avail using them,

benefits of api in fintech and banking

1. Improves The Overall Cost

When it comes to numerous banking services, the concept of open API development has been proven to be a life-saver. Yes, integrating them into a variety of applications lets you track every crucial information about the transaction and also with related issues of the bank’s website to have a check on.

2. Encourages Sharing Of Data For Better User Experience

Banks are very sensitive with their user’s information and a lot more conscious when it is about sharing their customer’s data. With API integration, now the users get full control over their data. Henceforth, the customers can demand the banks to enable sharing of their data with any desired third-party provider. 

3. APIs, All Time Need For A Bank

As everybody is looking out for fintech app development, there are very fews chances for APIs in the banking industry to be outdated. As a result, there are hundreds of fintech startups still there that show customers demand to be in plenty. Even when it is about businesses, these APIs offer more services. 

4. More Services Gets More Competition

Where the usage of APIs have benefited the users it has also increased the competition in the market. This in turn increases the pricing in the financial industry. For instance, the users start using the financial services to compare the offers between banks and other institutions.

5. Quick And Effective Operations

The methodology of these APIs allows the banks to serve their clients with quick and efficient resolution. These APIs let the clients manage the banking transactions via mobile, online or wallet services across the devices – which prohibits clients from having a visit to the banks to make any transactions.

Now, let’s get some ideas using the use cases.

 
Make Customers Banking Experience More Personalized With MirrorFly!

What About Banking Use Cases In The Fintech Sector?

The open banking use cases tend to be limited with one’s imagination. At first the revolution started inside the financial market, wherein the later stages, it has moved into a prime, mainly for startups and developers to create new tools.

At an early stage the use cases that dealt with lending and credit markets were only being considered for banking and the rest were not in use until they planned to expand its reach to other sectors. This includes personal finance, insurance, payment methods and related fields. Let’s have a look some of the benefits that different industries are getting,

1. Price Comparison Websites To Track Users Info

The websites like MoneySuperMarket perform an analysis to compare prices embracing the APIs in the fintech economy, in order to become a direct online distributor of financial products. Here, these websites create API service layers to empower the sites and let them have commercial partnerships to grow.

2. Currency Exchange Among Industries Using Peer-To-Peer

When it is about transaction, the peer-to-peer network talks about needs and demands for simplicity in the processes. Today there are thousands of P2P payment apps offered by financial institutions with several services. However, with APIs in fintech like TransferWise app, you can eliminate the intermediaries in the process making the provider independent. 

3. Lending Via Peer-To-Peer Among The Industries

With lending, these P2P platforms support connecting lenders and borrowers with each other avoiding the need of any intermediaries. One among many popular platforms is LendingClub where the APIs are used to search, perform orders, monitor loans, configure the lending portfolios as an investment, and more.

4. Investment Management Across The Industry

Previously, it was a challenge for the financial advisors to get client’s information in order to provide optimized services. But, today the investment management APIs provide a way to portfolio information of individual clients by eradicating the need to make a guess on their client’s assets and net worth from several sources.

5. Develop The Ventures Of Open Banking

Most of the banking related organizations like ING are entertaining the concept of launching many independent ventures. They all focus on creating new products with the help of APIs integration. The three products that these organizations look for – a personal finance management aggregator,  financial service aggregator, and payconiq digital wallet. 

Beside this they also use the API-based developer portal to get connected with external developers.

6. Platforms Development With API Market

Some of the banks like BBVA with the platforms make use of BBVA’s API market. They offer many kinds of APIs, tools, and various other services that can allow the developers to build a partnership with banks to have commercial opportunities. Apart from them, some other similar players are also there who compete in the same course of action like TrueLayer, aiming to be a leading financial API development provider.

7. Payment Process Across The Industry

Need of APIs for payment processing is compulsory when it comes to businesses and merchants for a smooth transaction. Here, the APIs not only facilitates the payment process but also maintains and streamlines the check-out process while performing any online purchases. 

However, when used with web-based terminals, these APIs fully operate behind the point-of-sale system unlike Paypal, Adyen API permitting the users to stay on the page during the checkout process.

8. Encourages Regulation

While offering several banking and financial services, fintech and Regtech move along with each other. This especially happens when involved with third-party open APIs. 

However with fintech APIs, this is something that can not be negotiated easily as here the entire process of the open banking ecosystem is based on the user’s shared data verified by the institution itself.

Whereas with Regtech APIs, the solutions get you the programs starting from biometric identification to iris scanning at the end. Even here they will let you avoid repetitive form filling to have a better user experience.

9. Gets You White Label Services Never Compiling The Need To Build

If you check out the market, you can find many APIs including white-label APIs if ever planning to build your brand. Therefore, these APIs move well along with its use in banks and other fintech sectors. They allow the banks and other fintech companies to avail their benefits without the need to develop their own platform and programs.

Moreover, they permit the user to access their cloud based exclusive BaaS technology for faster payment and SEPA.

10. Gaming World With APIs

For any game to be successful they need to ensure the winners of rewards with their quick moves. If we consider RazorPayX, it assists the gaming organizations mobile Premier league , Rummy Culture, and many more to transfer rewards more promptly and easily.

Where the above section explains the benefits the use cases are having with APIs, What could be their future with fintech and banks? 

What’s The Future Of The Fintech And Banking Sector With APIs?

Once witnessing the present scenario and the usage of banking APIs, the future seems to be promising with businesses and larger communities. But of course, they will have a better outcome for tomorrow. 

This is so as these banking APIs do connect with e-commerce websites to facilitate online shopping on one hand. On the other hand, they also support the customers to have a check on their bank account instantly to plan the shopping to make payment. Sometimes, they do offer support for lending payments too while shopping using the lending API option at POS locations. 

According to the Mckinsey study on APIs in 2020, the banks are expected to triple the usage of APIs by 2025.

Wrapping Up!

After having such a deep insight, I hope my research would have given you more of the idea on these APIs for fintech and banking. Therefore, if this post grabs your attention to go for an API financial solution. Then I suggest you do some additional research from your end before choosing the right fintech solution provider.

Now, it’s your time to make a decision on how to proceed further. 

But, if you prefer to have further guidance then feel free to connect with us – We are here to guide you with some more future contents that will get you more clarity on the same. 

All the best!

Krushi Shivasangaran

Krushi is a Digital Marketer by choice & profession. She munches on topics relating to Technology, E-Commerce, Enterprise Mobility, Cloud Solutions and Internet of Things.

For years, when the global banking sector was dealing with complexities in operations – it was fintech companies that reframed the entire scenario with modern technologies. Yes, they used APIs to make a way for banks and other institutions. 

These APIs get fixed into any third party application creating a series of services letting the user’s financial data more accessible. They have also inspired the fintech companies to serve the financial sector in many ways with transparency in services for the account holder.

Well, all these sound cool right – But I know this might interest you to know more about them.

So, with no delay let’s get started!

What is API in Banking? – An Introduction!

The banking APIs are the set of protocols that tell the banking companies how to interact among themselves to make the banking process easy. 

api in banking

If we talk about the backend, these APIs connect the developers to the payment networks to display billing details. This in turn gets them converted into a necessary tool when it comes to BaaS (Bank as a services).

What is API in Fintech?

An API in Fintech is a program that’s used to interact with a financial institution’s server. They allow the fintech and financial services to interact with each other by enabling them to access as well as exchange the information.

Well, where the above data about the notion of APIs in both the fintech and banking sector would have gotten you some understanding of the concept,  now let’s see how these APIs benefit them in further run.

How APIs Benefit Fintech and Banking Sector – A Study!

If you look around, you can see that every other industry directly or indirectly makes use of banks and their APIs.

So, let’s have a check with some of the benefits that they avail using them,

benefits of api in fintech and banking

1. Improves The Overall Cost

When it comes to numerous banking services, the concept of open API development has been proven to be a life-saver. Yes, integrating them into a variety of applications lets you track every crucial information about the transaction and also with related issues of the bank’s website to have a check on.

2. Encourages Sharing Of Data For Better User Experience

Banks are very sensitive with their user’s information and a lot more conscious when it is about sharing their customer’s data. With API integration, now the users get full control over their data. Henceforth, the customers can demand the banks to enable sharing of their data with any desired third-party provider. 

3. APIs, All Time Need For A Bank

As everybody is looking out for fintech app development, there are very fews chances for APIs in the banking industry to be outdated. As a result, there are hundreds of fintech startups still there that show customers demand to be in plenty. Even when it is about businesses, these APIs offer more services. 

4. More Services Gets More Competition

Where the usage of APIs have benefited the users it has also increased the competition in the market. This in turn increases the pricing in the financial industry. For instance, the users start using the financial services to compare the offers between banks and other institutions.

5. Quick And Effective Operations

The methodology of these APIs allows the banks to serve their clients with quick and efficient resolution. These APIs let the clients manage the banking transactions via mobile, online or wallet services across the devices – which prohibits clients from having a visit to the banks to make any transactions.

Now, let’s get some ideas using the use cases.

 
Make Customers Banking Experience More Personalized With MirrorFly!

What About Banking Use Cases In The Fintech Sector?

The open banking use cases tend to be limited with one’s imagination. At first the revolution started inside the financial market, wherein the later stages, it has moved into a prime, mainly for startups and developers to create new tools.

At an early stage the use cases that dealt with lending and credit markets were only being considered for banking and the rest were not in use until they planned to expand its reach to other sectors. This includes personal finance, insurance, payment methods and related fields. Let’s have a look some of the benefits that different industries are getting,

1. Price Comparison Websites To Track Users Info

The websites like MoneySuperMarket perform an analysis to compare prices embracing the APIs in the fintech economy, in order to become a direct online distributor of financial products. Here, these websites create API service layers to empower the sites and let them have commercial partnerships to grow.

2. Currency Exchange Among Industries Using Peer-To-Peer

When it is about transaction, the peer-to-peer network talks about needs and demands for simplicity in the processes. Today there are thousands of P2P payment apps offered by financial institutions with several services. However, with APIs in fintech like TransferWise app, you can eliminate the intermediaries in the process making the provider independent. 

3. Lending Via Peer-To-Peer Among The Industries

With lending, these P2P platforms support connecting lenders and borrowers with each other avoiding the need of any intermediaries. One among many popular platforms is LendingClub where the APIs are used to search, perform orders, monitor loans, configure the lending portfolios as an investment, and more.

4. Investment Management Across The Industry

Previously, it was a challenge for the financial advisors to get client’s information in order to provide optimized services. But, today the investment management APIs provide a way to portfolio information of individual clients by eradicating the need to make a guess on their client’s assets and net worth from several sources.

5. Develop The Ventures Of Open Banking

Most of the banking related organizations like ING are entertaining the concept of launching many independent ventures. They all focus on creating new products with the help of APIs integration. The three products that these organizations look for – a personal finance management aggregator,  financial service aggregator, and payconiq digital wallet. 

Beside this they also use the API-based developer portal to get connected with external developers.

6. Platforms Development With API Market

Some of the banks like BBVA with the platforms make use of BBVA’s API market. They offer many kinds of APIs, tools, and various other services that can allow the developers to build a partnership with banks to have commercial opportunities. Apart from them, some other similar players are also there who compete in the same course of action like TrueLayer, aiming to be a leading financial API development provider.

7. Payment Process Across The Industry

Need of APIs for payment processing is compulsory when it comes to businesses and merchants for a smooth transaction. Here, the APIs not only facilitates the payment process but also maintains and streamlines the check-out process while performing any online purchases. 

However, when used with web-based terminals, these APIs fully operate behind the point-of-sale system unlike Paypal, Adyen API permitting the users to stay on the page during the checkout process.

8. Encourages Regulation

While offering several banking and financial services, fintech and Regtech move along with each other. This especially happens when involved with third-party open APIs. 

However with fintech APIs, this is something that can not be negotiated easily as here the entire process of the open banking ecosystem is based on the user’s shared data verified by the institution itself.

Whereas with Regtech APIs, the solutions get you the programs starting from biometric identification to iris scanning at the end. Even here they will let you avoid repetitive form filling to have a better user experience.

9. Gets You White Label Services Never Compiling The Need To Build

If you check out the market, you can find many APIs including white-label APIs if ever planning to build your brand. Therefore, these APIs move well along with its use in banks and other fintech sectors. They allow the banks and other fintech companies to avail their benefits without the need to develop their own platform and programs.

Moreover, they permit the user to access their cloud based exclusive BaaS technology for faster payment and SEPA.

10. Gaming World With APIs

For any game to be successful they need to ensure the winners of rewards with their quick moves. If we consider RazorPayX, it assists the gaming organizations mobile Premier league , Rummy Culture, and many more to transfer rewards more promptly and easily.

Where the above section explains the benefits the use cases are having with APIs, What could be their future with fintech and banks? 

What’s The Future Of The Fintech And Banking Sector With APIs?

Once witnessing the present scenario and the usage of banking APIs, the future seems to be promising with businesses and larger communities. But of course, they will have a better outcome for tomorrow. 

This is so as these banking APIs do connect with e-commerce websites to facilitate online shopping on one hand. On the other hand, they also support the customers to have a check on their bank account instantly to plan the shopping to make payment. Sometimes, they do offer support for lending payments too while shopping using the lending API option at POS locations. 

According to the Mckinsey study on APIs in 2020, the banks are expected to triple the usage of APIs by 2025.

Wrapping Up!

After having such a deep insight, I hope my research would have given you more of the idea on these APIs for fintech and banking. Therefore, if this post grabs your attention to go for an API financial solution. Then I suggest you do some additional research from your end before choosing the right fintech solution provider.

Now, it’s your time to make a decision on how to proceed further. 

But, if you prefer to have further guidance then feel free to connect with us – We are here to guide you with some more future contents that will get you more clarity on the same. 

All the best!

Krushi Shivasangaran

Krushi is a Digital Marketer by choice & profession. She munches on topics relating to Technology, E-Commerce, Enterprise Mobility, Cloud Solutions and Internet of Things.

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