How Banking Benefits from API’s
The communication between Internet banking systems and third parties are made possible with the use of an application and programming interface (API). 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 a banking API can do this, the customer’s consent must be secured.
The main advantage of API in a generation where time is money, is the elimination of redundant procedures in terms of verifying the identities of new customers. In other words, the technology increases speed and improves ease of use for third-party financial service providers. After a successful online banking login, nothing else is required. A simple example is credit scoring, which can be completed in a matter of seconds, with data being accessible from a client’s bank account via 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.
While many banks and financial institutions have been there for more than a century, that doesn’t mean they haven’t kept up with 21st century 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, behind these portals are API’s that facilitate the retrieval and updating of information from an entire range of databases. These very digital portals can also depend on API’s to help customers in different ways, such as currency exchanges, finding nearby locations, and so on.
Peer-to-peer payment transfer programs are gaining ground, especially among younger people who have a preference for cashless payments. With bank accounts being linked to such platforms through API’s, financial institutions are able to 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. Advanced analytical procedures of this kind count on API’s in collecting data from multiple 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.