Open banking is a concept where banking services are integrated into a multitude of financial services. These allow for driving real value services that are traditionally not possible, or too cumbersome to perform.
Technology has helped to smooth out the wrinkles. Spanning across different and independent systems, Fintechs of today can leverage banking APIs to grow capabilities and deliver superior experiences.
APIs: The Answer Fintechs Have.
Integrating banking services with other financial ones is not so difficult, thanks to Application Programming Interface (API). These are exactly what they sound as. A fintech offering a service may require some data from a user’s bank. But the bank being an independent organization, will have its data isolated, perhaps even on a different format or system. Fintechs openly accessing bank data is also another issue.
APIs act as go-between. Helping fintech users connect to their banks and only specific data being pulled – in a format that is acceptable and compatible to the fintech itself.
Top Banking API Use Cases.
The ease of connecting two independent or incompatible systems using API has been implemented in the banking sector for some time now. Most of us don’t even realize we are using these. The android or iOS mobile app you use to login to your bank account is probably using one to connect with the bank’s servers and pull your account balance to show to you.
Here are some of the most innovative and top banking API uses cases of 2023:
Intending to pay your premium or get new insurance? Insurance providers can use APIs to access your credit and banking services. Instead of you furnishing the data, they can directly pull it from your financial service providers to evaluate your insurance rates and premium at a touch of a button.
This allows users to get instant quotes rather than waiting days.
With the rise of the BNPL (Buy Now, Pay Later) industry, loan providers need to have access to financial standing, identity verification, KYC, AML and other data to approve any loan.
Again, APIs can help these Fintechs access the data, analyzing it offering a personalized loan with appropriate limit, interest and duration.
Connecting utility providers with Fintechs and banks, the financial institutions can retrieve the bill and inform their users of the total amount and due date. Users can then simply use their banking app to pay off the bills from their checking account or credit card.
Banks and Fintechs can even set up a recurring auto payment where the bills are automatically paid off without the user initiating it every time.
Fintechs offering wealth management services can use APIs to access the complete portfolio of their users and bank accounts. This will help them create a better and more personalized wealth planning such as investments, stock options, etc.
Budget and Expense Tracking
Budgeting and expense tracking has advanced over years, with now dedicated apps that you can enter your expenses and these help you to keep within your budget. But this is 2023 and one shouldn’t “enter” how much they spent on groceries.
Using APIs, these apps can connect with banks and credit providers to keep track of how much and where is money spent, building an expense report and warning users if they exceed their set limits.
But Why Are These Not Implemented Easily?
Using APIs for innovative and different banking service integration is a game changer. From offering services not possible independently to completely changing the user experience, banking APIs are now an essential part of any fintech organization.
The problem is that each API has to be created from scratch by service providers. From development to beta testing to deployment to monitoring can at times take as much as 6 months – for each API!
Integrated Finance Makes it Easy
Launching any fintech business with bespoke payment and banking API is a challenge, but this is very smooth and efficient with Fintech infrastructure platform, Integrated Finance.
By enabling quick access APIs in digital banking, the platform is revolutionizing the sphere by orchestrating and standardizing the behind-the-scenes Fintech pipework, offering a multitude of API connection solutions:
- Account issuing: Core digital banking capabilities like general ledgers, wallets, accounts and transactions on demand.
- Cross-border and local payments: Customized payment rails for fast and cost effective transfers, including coverage for over 130 currencies through the connection to the SWIFT payment network.
- Payment orchestration: Automated financial workflows to streamline payment flows from multiple financial providers while being regulatory friendly.
- Compliance and risk: Pre-built integrations for a variety of requirements such as KYC, KYB, Transaction Monitoring, licensing and and bolt-on services.
- Card issuing and processing: Virtual and physical card issuance, including debit, credit and prepaid cards
The best part is Integrated Finance can help Fintechs build all this through a single API, drastically reducing complexity in operations and smoothing out wrinkles in management.