An API is a software intermediary through which software applications communicate with each other. This technology has changed how we operate and how business transactions are initiated and actualized. The financial sector is one of the industries that has seen major changes due to APIs. Today, a better percentage of their transactions are done online using APIs. Those that have not embraced this change have been slowly faced out.
APIs in Financial Services
APIs have forced financial service providers to transform the way they develop and create their products. This has also been pushed further by customers demanding for personal information security, faster payments, more transparency as well as competition from other businesses. The need for agility and speed by both employees and customers has left financial service providers with no option but to embrace the need for change.
APIs are playing a central role in creating a solution for all these requirements. They are able to do this by unifying data and information without merging operational systems. APIs enable financial service providers to implement the digital transformation required without having to overhaul their current infrastructure. This, in turn, helps in saving effort and time, as well as money.
Transparency is one of the things that is driving digital transformation in financial service providers. Customers want to know everything about the financial service provider before and when transacting with them. APIs have not only provided solutions for these firms, but also for third-party firms that would like to access information related to things such as financial summaries and stocks. One of the APIs used for this is the Yahoo Finance API. To learn more about this API, check out the tutorial here. Financial service providers are also using APIs in the following areas of operation;
Financial service providers need to partner with other businesses to ensure uninterrupted business flow. For example, a taxi company might want to integrate with a financial institution to ensure that customers are able to pay for their services directly from their bank accounts.
The integration APIs are used for money transfers with other financial institutions, online payments, and other sensitive transactions. This is something that almost all financial institutions have to embrace for them to survive.
Financial service providers are using APIs today to drive their digital services especially in mobile and web applications that they use to provide information related to their products, locations, and other services.
For example, there are APIs that can be used by third-party service providers to get a person’s account details, of course, with the person’s consent. There are banks that use APIs to allow their customers to locate the bank branches and even ATM locations across the country of operation. This shows how APIs have made things easier for both financial service providers and their customers.
Financial service providers are increasingly creating partnerships with other businesses and the marketplace at large. Even though this is still at its early stages, we have seen financial service providers partnering with other businesses such as online stores to implement online payments by vendors. There are other options that offer lending and financing options without having to physically go to the financial service provider.
These options have been made possible by third-party APIs that are built by developers and request access to the financial institutions. APIs are offering a number of solutions making it possible for financial institutions to integrate with other businesses.
APIs are slowly moving financial service providers from offering physical operations to digital ones, fueled by pressure from the requirements of their customers. They (customers) want to do almost everything on the go, from making payments to getting information about their accounts. They want to be able to get these services from the comfort of their homes, leaving financial institutions with no option but to embrace APIs. With APIs, these institutions will be able to provide all these services to their customers without any problems.