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How Fintech Companies are Using APIs

In the past few years, technology has helped finance and banking companies to grow and change their ways of operations. A major contributor to this has been the use of APIs (Application Programming Interfaces).

They have made it possible for people to initiate transactions without having to physically visit their financial institutions. People are also able to do this using a wide range of devices and complete transactions within a short period of time.

Open banking has forced institutions to adopt the use of APIs. Financial institutions are required to provide their customers’ information to third-party providers, of course with permission from the customers. This has allowed developers to come up with applications and other programs that help in the management of personal finances.

These companies are also using APIs to provide access to information related to stocks, financial summaries, and balance sheets. They use APIs such as the Yahoo finance API that can be used in any programming language to provide historical and real-time data for different financial markets.

Apart from providing data on financial markets, fintech companies are also using APIs to do a number of things, among them;

1. Managing Investments

Fintech companies are using APIs to manage their clients’ investments. They use the APIs to gain access to information about potential investors to make sure that their brokers and advisors have it before interacting with the investors.

This helps in making sure that a client will be guided towards the right information based on their financial portfolio compared to if the companies were guessing or trying to come up with a picture to depict the clients’ net worth and assets.

2. Processing Payments

Fintech companies are using APIs to offer their clients as many payment options as possible. Developers have come up with APIs that allow merchants to accept different payment forms when clients are making online purchases.

This has grown exponentially especially during the COVID-19 pandemic that has forced countries and major cities around the world to remain under lockdown. Apart from offering multiple forms of payment, APIs help in providing an efficient checkout process when making purchases.

3. Regulating Customers

Since fintech companies mostly deal with finances and information related to finances, it is increasingly becoming important for them to employ a regulation technology. This technology helps the companies to identify customers using their services to avoid common things such as fraud.

APIs have made regulation easy with technologies such as biometric identification where fintech companies use a number of identification technologies like iris scanning, fingerprint identification among others.

How Do Fintech Companies Benefit from the Use of APIs?

1. APIs Have Helped Open Up Fintech Companies

Initially, financial institutions used to hide their customers’ information from third-party access. Even though one might argue that this is a good thing when it comes to the privacy and security of such data, it used to be very difficult for other users and programs that needed such data for their operations.

The use of APIs has made it possible for these institutions to share their customers’ data securely and efficiently without having to worry about any unauthorized access.

2. Increased Cost-Effectiveness

A few years ago, it was costly for financial institutions to provide multiple services to their clients. For example, most banks could provide limited services such as savings and checking accounts to their clients.

However, due to the use of APIs, banks are now able to offer multiple services that meet the demands of their customers. For example, a customer is now able to use software that implements an API to integrate all accounts they have with a certain bank, or even with different banks.

3. Addressing Customer Demands

Fintech companies are using APIs to address changing customer demands. For instance, through the use of APIs, they are able to collect customer feedback and address changes that they (customers) need.

They also use APIs to collect and analyze customer usage data that helps in predicting futures changes in demands and making the right decisions for their companies. Customers are also getting remarkable experience when accessing services from these companies due to the use of APIs.

Finally, if you look into ways through which technology is helping your finances, you will find that APIs are playing a significant role in all of them. This shows you how important they are in every financial aspect of our lives as well as that of financial institutions.