API BANKING
The banking industry is
The Internet of Everything (IoE)
increased utilisation and wealth of
continuously growing at a fast pace.
revolutionised consumption
information available from these
Innovations in the banking space
three years ago with the arrival
systems. Banks are making use of
include API-first banks, banks that
of smartphones and the apps
this knowledge and using it to make
serve as developers, and more. Even
that came with them. This has
risk assessments more informed
large institutions are no longer
given birth to a new kind of
and efficient. For example; by using
satisfied simply by serving their
industry – one built on APIs. An
machine learning technology to
customers.
API (application programming
analyse credit default risk they
interface) is just a way to get
could reduce their investment in
It’s no secret that financial
software or internet services to
vulnerable clients and increase their
institutions are using technology
work with your company’s systems.
returns on asset protection.
to improve their services and their
When you need a new way to buy
bottom line. However, with so many
something from Amazon, for
The banking industry is undergoing
different companies using the API
example, you don’t just request
a historic disruption as FinTech
space for different purposes, it
a shipping application – you also
startups redefine how traditional
can be challenging to understand
make an API request. The company
banking is done, inside and out.
each service’s impact on the global
can fulfill that request – send an
Payments are the heartbeat
economy. API Banking--the use of
email with tracking information
of any bank, and vital to their
an unstructured, interconnected set
about your order, or deliver the
security. Banks must get in front
of Internet services and businesses
product to your doorstep – because
of these changes and find ways
as a way to improve financial
it understands what type of product
to successfully leverage all this
services delivery--is one-way
you need, and has information
innovation. Although FinTech
banks are trying to create new
about your purchase via a previous
companies are moving quickly
economic systems that support
API request made by someone else.
to build technology solutions
a diverse set of customers while
and expand their customer base,
reducing their vulnerability to
While the financial industry has
existing infrastructure providers
disruptive changes in the financial
been focusing on increasing its
have not kept pace with this change.
sector.
transaction capacity and providing
As a result, they will need to
better services, local financial
dramatically improve speed.
There are several reasons why API
services providers have also
banking is becoming the wave of the
seen the need to innovate to stay
future. The first and most obvious
relevant in their local markets. And
reason is cost reduction. Companies
one of the most effective ways to
can automate customer support
do so is leveraging the increasingly
and other processes with the aid
powerful Internet of Things (IoT)
of an API, improving the quality of
technologies.
service provided to customers while lowering costs. A good example
Due to the increasing popularity
of this is how Facebook keeps
and utility of APIs, financial
track of your emotions using an
institutions are now seeing a need
API, which allows the company to
to create better user experiences.
offer customised content based on your mood or situation. In turn,
The use of APIs and the integration
this allows users to have more
of machine learning and data
interaction with the companies they
science into financial services
already know and trust, making
hasn’t been happening in an inertial
them more likely to do business
way. Innovation is accelerating in
with them.
the financial sector because of the
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Banks and payment service providers (e.g. Visa, MasterCard) are exploring ways to modernise their infrastructure to offer better customer experiences. In conclusion, the banking and finance sector is doing a lot of work to simplify their systems and make them more agile. Simple and open API-centric architectures can drive down costs, improve business agility and make systems flexible.