Talking about fintech transformation, we can’t overlook fintech Application Programming Interfaces (APIs) and the role they are playing in the massive effects when fintech solutions change the finance industry.
How Does API Work?
In fintech, APIs serve as mediators between different pieces of software, enabling them to safely connect and exchange data.
APIs also contain a set of functions that can be tailored for different purposes, enabling developers to use them as building blocks for new apps.
The Benefits of Using Fintech APIs With Application Examples
For businesses, the use of fintech API is beneficial in a number of ways:
1. Third-party integrations
While users are continuously demanding new services, adding them often involves expenses. Making various services available through third-party integrations conducted via APIs keeps customers happy while ensuring cost-efficiency.
2. Security and compliance
In support of Open Banking, many countries introduced regulations requiring financial companies to provide third parties with access to customers’ data. Fintech APIs offer companies the means of working with sensitive data and opening it to third parties while keeping it secure. For example, APIs are capable of letting users control which apps may access their bank accounts, instead of logging into a bank account to grant permissions or letting the app learn their usernames and passwords.
3. Fast time-to-market
By using APIs companies can quickly add new app features and benefit from the accelerated launch of new products and services. They can also tailor API functions to their specific purposes and reuse some of the application components, which saves time and cuts the costs of fintech software development.
4. Cross-platform availability
Due to APIs, customers’ mobile, desktop, and wearable app versions can sync easily which accounts for seamless customer experience and better customer relationships.
Read more: How to Save Money on a Web Project for Startups and Enterprises
Top Use Cases of Fintech APIs
To be more specific, let’s now take a closer look at how financial companies are leveraging APIs to achieve cost-efficiency, fast time-to-market, and customer satisfaction. These top use cases for fintech APIs offer some vivid examples.
Digital banking
In banking, APIs are used to expand the portfolio of services. Authentication, payment processing, analytics, account information, and loyalty programs are some of the main domains for the use of fintech APIs. For example, HDFC allows RazorpayX API to access its services and perform money transfers and balance checks.
Lending and Mortgages
The use of APIs enables lenders to accelerate loan application processes and achieve greater customer satisfaction. Eli Mae, for example, is using APIs to accelerate the processing of loan applications. Another example is PayMyParents that utilizes an API for payments processing.
Verification engines
Formerly, the verification of information submitted by users of financial services required the work of several staff members. With the help of APIs, fintechs like Zillow are now doing it faster, by automatically contacting other electronic systems for verifications.
Opening accounts
This used to be a lengthy procedure, which required a physical visit to a bank. Companies like Meridian Link offer fintech APIs that are now enabling clients to easily open accounts online.
Aggregating data
To estimate the customers’ financial situation, companies have to aggregate data from all the clients’ accounts and view it in one place. Venmo, for instance, uses Plaid APIs to enable the pay-with-your-phone option.
Financial Market Data
Companies can also use APIs to broadcast financial data from multiple sources in real-time. For example, Thompson Reuters API enables companies to bring customers the most precise and recent financial market data to power their legal and commercial decisions.
Read more: Non-Banks and P2P Lending: SMEs Go Digital
The Most Interesting Fintech Startups with APIs
Some promising fintech startups built using APIs include:
- KissKissBankBank: A crowdfunding platform based in France. Uses MangoPay API to transfer payments.
- Betterment: A savings and investing app that uses Plaid API to aggregate account information.
- Marqeta: This card issuing and payment solutions provider uses Alloy API for identity verification and fraud prevention.
- Transferwise: This money transfer service uses Twilio API to communicate with customers.
Final thoughts on The Future of Fintech APIs
Fintech APIs are at the forefront of the fintech revolution, helping businesses introduce innovative services, and venture into new markets without getting into heavy expenses.
Most importantly, Fintech APIs are available to companies of all sizes — from small fintech startups to large established enterprises and help level the field for competition in financial services.
For developers, APIs are opening the doorways to reliable and fast delivery of apps and services. Ultimately, the end clients are enjoying better customer experiences are reaping financial benefits.
Interested in creating your own fintech or banking solutions? Let’s develop a fintech app together with a team of professionals!
If you liked what you just read, show your support by clapping us to spread it among other people on Medium.
Follow us on Facebook, Twitter, Instagram, LinkedIn, Medium, and visit our corporate blog for more essays like this one on smart solutions.
Got questions? Feel free to contact us!
The story was originally written by Slava Podmurnyi, CEO & Co-Founder of Visartech Inc., and published on Nordic APIs.
