The transformative effect of APIs on the future of banking

The transformative effect of APIs on the future of banking

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Authored by
Victor JohnBritto
Assistant Vice President
NSEIT Limited

As a bank/financial company, are you looking to create an omni-channel experience for your customers? You can now deliver it by using the Application Program Interface (API). Similar to the Internet, which opened up the potential of connected computer networks, API in digital banking that is driving a new wave of innovation that focuses on sharing services.

While APIs are transforming business processes across multiple industries, companies in the BFSI sector stand to gain the most out of them. It’s because, as a BFSI company, you can use the digital banking technology to address the key issue of integrating your disparate systems in one seamless environment. By implementing APIs, you can bridge the gap in data exchange between different systems to create unified digital banking solutions.

How API-fication of Banking is driving innovation in the BFSI sector

APIs have evolved into one of the most vital tools for businesses as they offer the critical capability of one application program to be used by another. By pulling on internal and external resources together, they simplify innovation by enabling applications to easily exchange data and functionality, much more securely and seamlessly.

As a bank, you can use APIs in creating a robust digital banking service to share your data and programs with 3rd party providers (TPPs) in a secure way while also maintaining control over your customer data, making your apps more conducive to profitability. You can use the digital banking technology to create applications and services that are beneficial for your customers and also improve your financial transparency and efficiency. Here’s how BFSI companies can focus on creating the API backbone and leverage its power to be a part of the connected ecosystem.

Leveraging the power of APIs for a seamless connected environment

APIs now have a key role to play in providing innovative platforms for BFSI companies to create new and customized services. Changing regulatory mandates are helping banks to embrace open banking with freedom, and many of the current and future banking applications are all set for API-fication. By leveraging API in digital banking, banks can integrate various systems and applications, access internal and external resources, enhance security, and foster innovation.

As a bank/financial company, you can use APIs to introduce new and better Fintech products that are more relevant to your customer needs. For instance, a leading private sector bank in India enabled an API for a loan-comparison app, which potentially allowed it to acquire new business from customers shopping for new loans. By embracing the digital banking service, you can stay ahead of the curve and offer innovative solutions that enhance the customer experience. Banks, Insurance, and Financial Institutions are now turning towards a connected ecosystem led by account aggregation all powered by APIs. With APIs coming into the picture, they are playing a strategic role in curating new products and providing benefits.

You can also enjoy a range of added benefits such as

  • Significant cost reduction
  • Conservation of time and effort
  • Improved regulatory Compliance
  • Minimal risk exposure
  • Enhanced customer experience

Matching customer-demand by delivering world-class experiences

Through API-led connectivity, you can bring your data and services onto a single platform that enables broader consumption by your business. You can then methodically design and use manageable APIs for specific purposes. By adopting API-led connectivity in the context of digital banking solutions, banks can design and manage APIs in a methodical manner.

Each of these APIs can be used to harness various business functions such as –

  • Opening up new revenue streams
  • Optimizing existing products
  • Extending customer reach and value
  • Easy Integration of backend data and applications
  • Efficient implementation of systems and operations
  • Extracting valuable insights to make better business decisions

By leveraging APIs, banks can forge partnerships with third-party enterprises, expanding their revenue options and diversifying their business portfolio within the realm of digital banking services. Moreover, by using APIs you can move into markets you may never have considered. For instance, as a bank, you would be able to expand your revenue options by joining forces with other third-party enterprises. Using a platform built on a flexible API-led strategy, you can create new value chains where each link focuses on what you do best.

How to use APIs to transform your finance business

Today, businesses are increasingly dependent on how well you connect to external party apps, services, and devices, APIs have become the key to scale, foster innovation, and reach a wider audience.

As a bank, you can work with leading IT companies with expertise in digital transformation to develop an API-led architecture for your digital banking solutions. For instance, NSEIT helped one of India’s leading capital market players to accelerate innovation by implementing an API sandbox. The interfacing enabled third-party applications to access its common tools, services, and valuable assets. Thus, you can even use APIs to be a part of a connected environment quickly, conveniently, and cost-effectively.

Authored by
Victor JohnBritto
Assistant Vice President
NSEIT Limited
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