Finances Tips for The Average Joe
How Banking Benefits from API’s
The communication between Internet banking systems and third parties are made possible with the use of an application and programming interface (API). An independent payment provider, for example, will be able to access particular data about a certain user through his bank account through an API. Of course, before this can happen, that provider will have to secure the customer’s consent beforehand.
The main advantage of API in a generation where time is money, is the elimination of redundant procedures in terms of verifying the identities of new customers. In other words, third-party financial providers will be able to move with greater ease and speed. A successful online banking login is all that will be needed. Credit scoring is an easy example – the task can be done in seconds as data can be automatically obtained from a client’s bank account, thanks to the API.
Various kinds of API’s come with different target solutions and usages, but these are usually divided into core banking; plug and play (trading, accounting routine, etc.); cards, wallets and transfers; and acquiring (alternative phone payments, mobile transfers, etc.).
While many banks and financial institutions have been there for more than a century, that doesn’t mean they haven’t kept up with 21st century technology. To make this a reality, API’s helped them.
With the creation of digital portals, lending and investing can now be done over the Internet. And of course, what make these portals work are API’s that tackle information updates and retrievals from various databases. These same portals also depend on API’s for helping clients with their needs, such as finding accessible locations or exchanging currencies.
Peer-to-peer payment transfer programs have recently taken off, especially among younger professionals who prefer cashless payments. With bank accounts being linked to such platforms through API’s, financial institutions are able to increase customer satisfaction. With increased pressure coming from fintech and alternative providers on banks and other financial institutions, many organizations are resorting to advanced analytics to be able to meet the present and future needs of their clients. They may implement fraud analytics solutions to improve theft detection, for example, or predict future needs of present clients. Such type of advanced analytical action relies on API’s to gather data from different databases and other sources.
Though most banks are using internal API’s for improved information flow between legacy systems, a good number of them are still trying to blend functionality from business their partners. But API’s have the potential provide innovation and functionality to the business by boosting their systems’ and data’s availability to third parties, and by laying down new revenue opportunities for the two organizations.
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