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The financial and banking sector is witnessing a revolutionary shapeshift today. The pandemic-induced digital transformation has had its effects on the financial industry. Digital payments sector and digital banking have won the hearts of customers since it provides convenient, user-friendly, inclusive, and accessible financial services through screens. 

However, digital transformation comes with its own challenges. Seamlessly integrating disruptive technology and automation, and achieving 360-degree customer visibility is not easy as it sounds. Especially, traditional banks will have to go through several complex processes to achieve digitization and leave behind their legacy systems or migrate to new age platforms like the cloud. 

There is one solution that has garnered attention since it enables an easier evolution with minimal hindrances, API. 

Application Programming Interfaces or APIs are software interfaces that can connect siloed systems or applications. It acts as an intermediary that transfers messages/data from one part to another. Institutions like traditional banks carry many IT and operational siloes within and thus need to encourage conversation between them to enable digital integration. By incorporating APIs, organizations can merge all their siloes and collect gather data from everywhere without any complications. 

Let us look at some of the proven benefits of accepting APIs into a financial enterprise or bank. 

  • Seamless data sharing is the primary impact created by APIs. OpenAPIs enable both employees and customers to access data from a specific financial institution. Adopting OpenAPIs will open the data and information to a larger audience including Fintech and Regtech providers. These third-party collaborations will smoothly enhance agility and innovation. 
  • Banks can now enter the digital transformation sphere without wasting time using APIs. Rather than complex migration processes, APIs provide easy evolution within less time and under reduced costs. APIs do not demand a shift from legacy and on-premise systems. Instead, banks can integrate data from wherever it is without any barriers. 
  • Regtech APIs will ease the process of compliance, transaction monitoring, regulatory management, etc. Integrating fintech and regtech into the services, banks can gain a competitive edge and increase digital revenue. 
  • Today’s tech-savvy customers are not very patient in nature and demand speedy solutions, especially when it comes to financial services. APIs will enable banks to serve this demand by adhering to an omnichannel kind of strategy and enhancing accessibility through smartphones and other screens and also connect to disruptive platforms like the cloud.
  • API can provide personalized and responsive services to users by combining banking data, product information, online payment solutions, and more. API integrated with advanced data analytics will enable the institutions to extract user behavior patterns and trends. 

While APIs deliver all of these benefits, it does not ignore safety and compromise on data security. Authentication and permission-based user accounts are significant features of APIs. We are witnessing a rise in open and digital banks that aims to meet the needs of new generation consumers. Acquiring financial services is often considered a boring and time-consuming process. APIs an open banking system will redefine this preconceived notion by enabling faster, engaging, secure, and smart services.