If you look around today, everyone is distorted and linked directly or indirectly with the banking and financial stratum. Technology is broadening to walk upto the expectations of the youth, and so do the banks. Nevertheless, they stepped forward and entered into digitalization, as a fact, remarkably growing as well as expanding their arena for their customers. Moreover, the role of API (Application Programming Interface) is also tremendously behind the popularity of the banking industry.
There was a time when the entire banking sector faced complexities and challenges in its operations, which affected their account holders’ strengths too. And then, the fintech companies came into the picture, restructured the whole situation with modern technologies, and supported the banking sectors to outstrip their summons to contest. Though, fintech companies also used APIs that created successful paths for banks and other institutions, meeting customers’ high demands, introducing value-added propositions, and so on.
Regardless, in 2018, the proposal of open banking by the government of the UK, which is buzzing globally now and influencing various financial institutions in the world, showed a fantastic hike and popularity in the field of banking startups. However, open banking allows the third parties of the banks and other institutions to access users’ financial data.
Sounds great, right? It might amaze you further after you dig in for more about it. So, in this blog, I’ll reveal all the exciting series of using APIs for easy and better end results but first, let’s know about API in Fintech and Banking areas.
Role of API in Banking and Fintech sectors
API is an interface that supports integration with ample hardware-software intermediaries. In sectors like banking, API is capitalized as an approach to convey clients’ financial information with third parties and online banking systems. In addition, this behavior and rules identify the process of different software components and guide the elements or applications to connect.
Though in fintech, API is used to raise and issue commands to third-party service providers. Moreover, it highlights various types of integration supported by financial service providers to connect your internal systems to others. But do not get anxious after reading the statement about sharing information with third parties, as they are still secured and safe. Because APIs barricade them by acting as a protection mechanism via financial institutions sharing customer data with authorized TPPs.
Key Benefits Of API In The Fintech & Banking Sector
API is used worldwide by many other companies/industries, and people are surprisingly astonished and influenced by its advantages. So, below are some of the perks API authorizes to its customers.
- Stimulates data sharing: The scenario has been changed globally with the launch of a second payment services directive (PSD2) that allows data to be shared without second doubts with their desired third parties. Previously, the situation was not the same as banks were insured and choosy while sharing their consumers’ information, but now utilization of APIs has changed for the better.
- Enhances cost-effectiveness: The concept of open API development is proven to be the best aspect and works as a lifeguard while choosing between comprehensive banking services offered in the market. However, offering multiple services becomes costly for the banking institutions simultaneously, and here, the benefits of APIs for fintech are visible to the users.
- APIs – the need for an hour: Every field or technology requires upgradation from time to time, but in the banking industry, with the usage of APIs, there are a few chances of APIs getting outmoded. With its utilization, banks can provide a quick, proficient, and a seamless experience for their customers. Moreover, this empowered methodology allows clients to manage transactions via mobile banking, online banking, and wallet services.
- Higher competition: The rise in the usage of APIs in the banking sector leveled up the scale of competition in the market and benefitted the customers tremendously. Moreover, this turned up the prices of the financial industry. Consequently, consumers can choose to opt for various banking services or varieties.
Wrapping Up
After witnessing the undergoing explosive growth & usage of banking APIs, the future looks bright ahead for businesses dealing in the banking and the fintech domain. For a while now, API paved the way for a wealth of new business opportunities, high-level data security, access to real-time transactions, personalized financial services, and more.
Looking to hire the top fintech software development company to unlock revenue growth in this API economy? ForceBolt is here to help you deliver the most effective, bespoke API solutions and services to add maximum value to your business. We understand that in today’s fast-paced API world, you need to disrupt – or risk being interrupted by your competitors. This is where ForceBolt, the best fintech software development solution provider, can ensure businesses’ long-term success in the API economy. Get in touch with our expert app developers today!
Akshay Dhiman
Chief Technical Officer
The Chief Operating Officer of ForceBolt and a decisive leader who possesses a wide array of technical skills and management skills to implement operational changes by working at different levels of development. Being enthusiastic and technology proficient, he understands the importance of staying up-to-date with the latest technological transformations and provides competitive, scalable and efficient solutions. He has a good command of technical language and possesses good communication skills. Being a leader makes him a good team player, and he resonates with his priorities well.
