Banking and Benefiting from API’s
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, before this can happen, that provider will have to secure the customer’s consent beforehand.
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 other words, third-party financial providers will be able to move with greater ease and speed. A successful online banking login is all that will be needed. Credit scoring is an easy example – the task can be done in seconds as data can be automatically obtained from a client’s bank account, thanks to the API.
There are different kinds of API’s with different target uses and solutions, but these are mainly categorized into core banking, plug and play, cards/wallets/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 is made possible for them with the help of API’s.
With digital portals, lending and investing can now be done online. And of course, what make these portals work are API’s that tackle information updates and retrievals from various databases. These same portals also depend on API’s for helping clients with their needs, such as finding accessible locations or exchanging currencies.
Peer-to-peer payment transfer programs have recently taken off, especially among younger professionals who prefer 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 implement fraud analytics solutions to improve theft detection, for example, or predict future needs of present clients. This type of advanced analytical action depends on API’s in terms of data gathering from various sources and databases.
As majority of banks are taking advantage of APIs internally to enhance the flow of information between legacy systems, a lot are still learning to use them for incorporating functionality from their business partners. However, API’s can strategically offer innovation and functionality to the business by increasing their data and systems’ accessibility to third parties, and also by developing new revenue opportunities for the two.