After the appearance of Open Banking, the new trend of the financial system is only one: to automate its services thanks to the implementation of APIs in banks. While this has generated many unknowns, it is indisputable that this is the only solution to survive in a digital environment, in which they are increasingly displaced.
“APIs used by banks are an innovative, unique and advanced way to reposition themselves as a reference for your customers. Their development is growing.”
One by one, banks have discovered their benefits and the possibility of combining them with Open Banking. After all, progress is unstoppable. An example of this is that, in Europe, from 2018, banks are obliged by law to provide account information through the use of APIs.
In this way, small and large institutions have been tempted to develop APIs for banking or Open Banking, in order to adapt. Once implemented, the benefits are multiple, alongside a significant increase in income and financial development.
But, despite all this benefit, what is the role of APIs in the banking sector? What are they and how can they help you? This and much more is what you will learn with us, so read on!
Financial Data Aggregation APIs
An API (Application Programming Interface) is an interface that allows to synchronize, link and connect the database of service with any application; that is to say, they serve as a kind of bridge that guarantees the traffic of data in a safe way and without involving third parties.
Their implementation in the banking system is basically the same: they link a bank’s database (its customers’ information) with different applications or programs, thus forming a network encouraging the promotion of services, payments, and products appropriate to each person.
This aggregation of data from a bank works well for private clients, businesses and, above all, owners of financial institutions.
Its benefits range from cost reduction, optimization of services, reduction of time spent on transactions, increased revenue and facilitation in all the needs of those who accept it.
“Open Banking APIs provide an ideal financial ecosystem for conducting business, as everything remains interconnected: both needs and solutions.”
In addition, when a bank develops its own APIs it can link them to other APIs and so the system grows. In short, APIs are a channel for all kinds of business strategy.
Another aspect that is optimized by APIs is the analysis of customer data and the increase in its value. This leads to public loyalty and a greater attraction of other people, thanks to the fact that their needs are met by the action of the bank.
Open Banking API Questions and Answers
Since the development of the Open Banking APIs, many questions have arisen about all that their implementation entails. We could summarize some of them as follows:
How do a bank’s customers benefit from APIs?
The development of APIs and their connection to banks helps customers in a number of ways: it saves time spent on transactions, makes available the services and products you may need, facilitates all operations and offers practical and simple solutions to every problem.
What are the examples of APIs created for aggregation of financial data?
Some examples of APIs that offer Open Banking services are Yodlee, Eurobits Technologies, Kontomatik, Plaid, among others.
Is it possible to increase a bank’s income with Open Banking APIs?
Yes, there is high profitability made available by Open Banking APIs for financial institutions. In fact, it is estimated that there may be a 20% increase in each bank’s revenue when they implement them. In an environment where digital solutions are growing, this represents a big benefit.
Can Open Banking APIs compete with FinTech?
Currently, APIs are the alternative to FinTech companies that, for some years now, have displaced banks as financial institutions. The digital development provided by APIs allows growing beyond a structure, which is of great help when you want to reach new customers and gain the loyalty of those already established.
The use and development of APIs for banks is a necessity. Their application is the ideal way to ensure growth and make life easier for your customers.
APIs for online banking offer benefits in all areas, which is why many financial institutions have chosen to implement them. Adapting to a technological age is essential if you want to stay on top of things.
However, for the integration of APIs in online banking, the best option at present is WSO2. With their different solutions, they guarantee essential aspects such as the security of information and services that work properly. Do you want to know it? We’ll tell you about it!