When discussing FinTech transformation, one can’t overlook the role that Application Programming Interfaces (APIs) are playing. APIs are having massive effects, enabling FinTech solutions to change the finance industry for good. Below, we’ll consider how these financial APIs work, look at their benefits and examine top use cases among some innovative FinTech startups.

How Do APIs Work?

In FinTech, APIs serve as mediators between different pieces of software, enabling them to safely connect and exchange data. APIs also contain a set of functions that can be tailored for different purposes, allowing developers to use them as building blocks for new apps.

Benefits of Using FinTech APIs With Application Examples

For many businesses, the use of FinTech APIs is beneficial in several ways:

1. Third-Party Integrations

Users are continuously demanding new services, and developing them often involves expenses. Making various services available through third-party integrations conducted via APIs keeps customers happy while ensuring cost-efficiency.

2. Security and Compliance

In support of Open Banking, many countries introduced regulations requiring financial companies to provide third parties with access to customers’ data. FinTech APIs offer companies the means to work with sensitive data and open it to third parties while keeping it secure. For example, APIs are capable of letting users control which apps may access their bank accounts, instead of logging into a bank account to grant permissions or letting the app learn their usernames and passwords.

3. Fast Time-to-Market

By using APIs, companies can quickly add new app features and benefit from the accelerated launch of new products and services. They can also tailor API functions to their specific purposes and reuse some of the application components, saving time and cutting FinTech software development costs.

4. Cross-Platform Availability

Using APIs, customers’ mobile, desktop, and wearable app versions can sync easily, allowing seamless customer experiences and better customer relationships.

Top Use Cases of FinTech APIs

To be more specific, let’s now take a closer look at how financial companies are leveraging APIs to achieve cost-efficiency, fast time-to-market, and customer satisfaction. These top use cases for FinTech APIs offer some vivid examples.

Digital Banking

In banking, APIs are used to expand the portfolio of services. Authentication, payment processing, analytics, account information, and loyalty programs are some of the main domains for the use of FinTech APIs. For example, HDFC allows RazorpayX API to access its services and perform money transfers and balance checks.

Lending and Mortgages

The use of APIs enables lenders to accelerate loan application processes and achieve greater customer satisfaction. Eli Mae, for example, is using APIs to expedite the processing of loan applications. Another example is PayMyParents, which utilizes an API for payments processing.

Verification Engines

Formerly, the verification of information submitted by users of financial services required the work of several staff members. With the help of APIs, companies like Zillow are now performing these operations faster by automatically contacting other electronic systems for verifications.

Opening Accounts

Opening a bank account used to be a lengthy procedure, requiring a physical visit to a bank. Nowadays, companies like Meridian Link offer FinTech APIs that enable clients to easily open accounts online.

Aggregating Data

To estimate the customers’ financial situation, companies have to aggregate data from all the clients’ accounts and view it in one place. Venmo, for instance, uses Plaid APIs to enable the pay-with-your-phone option.

Financial Market Data

Companies can also use APIs to broadcast financial data from multiple sources in real-time. For example, Thompson Reuters API enables companies to bring customers the most precise and recent financial market data to power their legal and commercial decisions.

The Most Interesting Fintech Startups Using APIs

Some promising fintech startups built using APIs include:

  • KissKissBankBank: A crowdfunding platform based in France. Uses MangoPay API to transfer payments.
  • Betterment: A savings and investing app that uses Plaid API to aggregate account information.
  • Marqeta: This card issuing and payment solutions provider uses Alloy API for identity verification and fraud prevention.
  • Transferwise: This money transfer service uses Twilio API to communicate with customers.

Final Thoughts on the Future of FinTech APIs

Fintech APIs are at the forefront of the FinTech revolution, helping businesses introduce innovative services and venture into new markets without incurring heavy expenses.

Most importantly, Fintech APIs are available to companies of all sizes — from small fintech startups to large established enterprises — helping to level the field for competition in financial services.

For developers, APIs are opening the doorways to reliable and fast delivery of apps and services. Ultimately, the end clients are enjoying better customer experiences and reaping financial benefits.