An Applications Programming Interface (API) is a computing interface that allows applications to communicate and share information. With recent advancements in technology, APIs have played a significant role in fueling innovative ideas that are running most businesses, among them banks.
However, not all banks have been able to achieve their full potential with the use of APIs. Some of them (together with businesses in other industries) are still trying to figure out the use cases of APIs in their respective industries. Such businesses are fighting for survival due to the stiff competition they face from those that have already implemented APIs.
Banks and other financial institutions have laid down plans and implemented APIs in their daily transactions. In return, the APIs have helped them in a number of ways, among them improving the quality of services to their clients, maximizing profits, giving insights into their target markets, and helping them foresee future changes in customer demands.
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For instance, financial institutions are using stock trading APIs to gain access to historical and real-time data on financial assets being traded in different stock markets. They are also able to get public stock prices, exchange-traded notes (ETNs), and exchange-traded funds (ETFs) with these APIs.
How Can Banks Use APIs?
Banking Mobile Applications
Mobile devices are one of the most used devices in the world. This has opened an opportunity for businesses to try and reach their clients wherever they are and when they want. However, to do that, they need to come up with a mobile application with different functionalities to meet both their needs and those of their clients.
With APIs, banks are coming up with mobile applications that transform their operations. The APIs allow them to add all the functionalities that they need to the applications. They can also use the APIs to track their customers’ usage and gain insights into ways through which they can improve the customers’ experiences.
Customers can use these applications to get the bank’s general information and customized information as well as initiate transactions. They can get things like account alerts and balances, pay bills, schedule appointments, get account statements, and find their credit score among other things, all within a click on their mobile devices.
Creating Partnerships
APIs are helping banks to get business partners easily compared to before. They provide these partners with APIs that allow them (partners) to easily access information with regards to their accounts within a click of a button. Some examples of partners that banks can work with using APIs include brokerage firms, creditors, MasterCard and Visa, and clearing houses among others.
In addition, these partners use the same banking APIs to offer services to their clients. For instance, a creditor can use the banking APIs to get the credit score of a client before doing business with them. This way, banks that have implemented the use of APIs are miles ahead of their competitors and have been able to streamline their services.
Deploying Public APIs
Banks that develop internal APIs can deploy them publicly to further increase access to their services. These could be the same APIs that they use with their business partners. This helps them to gain more customers and drive additional business their way.
For example, banks can provide APIs to some of the world’s leading eCommerce stores. When a customer places an order on these stores, they are able to directly pay for their items by bank transfer without even having to contact the bank.
Conclusion
The banking industry is among the world’s oldest industries that have continued to survive over the years. This survival has been made possible by the ability of the industry to adapt to changes in technology and partnerships with tech companies that develop solutions for them.
For instance, we are seeing global tech companies such as IBM acquiring fintech companies to strengthen banking solutions. Today, APIs are playing a big role in helping the banks to implement innovative ideas that boost their businesses and help address changing customer demands.
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