An application and programming interface (API) is a vital means of communication between web banking systems and third parties. An independent payment provider, for example, will be able to access particular data about a certain user through his bank account through an API. Of course, a banking API can only do this with the customer’s consent.
The biggest benefit of API in an era where time is equivalent to money, is the elimination of repetitive steps when it comes to new customer verification. In short, the technology allows independent third-party financial service providers to move faster and easier. The only requirement is a successful online banking login. An easy example is credit scoring, which can be done within seconds since data can be expediently accessed from a client’s bank account through the API.
While API’s are made with a variety of target solutions and uses, they are generally divided into four areas: plug and play; core banking; cards, wallets and transfers; and acquiring.
A good number of the banks and financial institutions today have been around for more than a hundred years, yet they are up-to-date with modern technology. This turned into reality for them through the help of API’s.
With digital portals, lending and investing can now be done online. And certainly, behind these portals are API’s that take care of the information retrieval and updating procedures conducted with various databases. These same portals are also largely dependent on API’s for customer services, such as finding nearby locations, currency exchange, etc.
Peer-to-peer payment transfer programs are gaining ground, especially among younger people who have a preference for cashless payments. Bank accounts can be connected to these platforms via API’s, helping financial institutions increase customer satisfaction. Because of the heightened pressure of fintech and alternative providers on banks and other financial institutioins, a lot of organizations are using advanced analytics as a way to address their clients’ current and future needs. They may, for instance, use fraud analytics solutions in order to detect theft more efficiently, or they can use the same technology to predict their current customers’ needs in the future. Advanced analytical procedures of this kind count on API’s in collecting data from multiple sources and databases.
Though most banks are using internal API’s for improved information flow between legacy systems, a good number of them are still trying to blend functionality from business their partners. However, API’s can deliver Innovation and functionality to the business by increasing system and data availability to outside parties, as well as establishing new income streams for both organizations.