The rise of Open Banking has changed the dynamics of the financial sector, making it more end-user friendly with better financial services. With it, we have seen a rapid increase in the adoption of application programming interfaces (APIs). This allows businesses to collaborate and ensure the most innovative solutions are available to the market.
Open APIs have given financial institutions and businesses alike the ability to easily offer innovative banking and payment features to their end-users. This is because they have enabled businesses to integrate new solutions into their existing infrastructure, with minimal impact on day-to-day functioning and short ready-to-market periods.
This new approach is cost-efficient and time saving, allowing businesses to focus on providing excellent core services for customers, while reducing the need to invest in additional resources and staff.
But, to truly understand the advantages of this financial evolution, we must look at how open APIs work and the benefits they pose for both businesses and customers.
What are Open APIs?
Open APIs are a fast and simple way for businesses to integrate their services with one another. They work by giving companies online access to new solutions that can be simply attached to existing frameworks. When developers create APIs, they share a set of rules and protocols of how the code of a feature must be used and what it’s capable of.
What’s more, the API environment from a supplier is typically written in a universal language that makes it easier to be understood by other developers and integrated into other applications. This allows businesses to introduce frameworks, services, and software tools into their existing structure, without having to change their entire framework. Instead, they can adopt a ‘plug and play’ approach, where banking and payment features from specialised third party suppliers can be attached to the business structure that already exists.
As a result, this universal language and clear set of protocols enables the integration process to be efficient and more secure from programming errors. At the same time, developers and collaborating partners can easily and quickly reach an understanding about how the technology works and the benefits the partnership will bring for both businesses.
APIs: more revenue, less problems
By creating financial services through the integration of open APIs, it can significantly reduce costs and increase efficiency. By simply connecting API protocols into their existing framework, financial institutions can offer tailored and innovative solutions to their customers via highly specialised third party suppliers. This removes the need to buy a one-size-fits-all package from a bank or other provider where 90 per cent of services included aren’t necessary. Instead, businesses choose what they need and add it to their product offering.
What’s more, this approach reduces the need to invest in resources and staff to build new features from scratch. Instead, already existing API-based solutions from other parties can be managed in the back-end. The result: financial institutions simply need to plug in the desired financial feature into its own system and offer its new services to its customer base. This is a win-win for all involved; the business will generate revenue from its new product offering and customer will reap the benefit of the new solution.
Becoming flexible with APIs
As a result of easy API-integrations, improved efficiencies and reduced costs, financial institutions can become more flexible with what they offer to customers. This is because they build services catered to the exact customers’ needs, without making large and unnecessary investments. As a result, financial companies can offer modular financial services with solutions that make customers’ lives easier, such as; multi-currency IBANs, in-account and in-transfer foreign exchange (FX), and fast cross-border payments.
This stems from the simplicity that APIs create. Once a financial institution understands what its customers need, it can swiftly integrate this service using a back-end API. This ensures the financial services’ offering can be changed to meet any future requirements.
Furthermore, they can continuously update services so they include the latest innovative solutions on the market. This way, businesses avoid being stuck with outdated legacy systems and prevent customers looking elsewhere for the latest technology. What’s more, it reduces the time-to-market for these new products, as integration is quick and simple.
Making the most of APIs
Financial institutions need open APIs to ensure they stay ahead of the competition, while providing the services their customers crave. The technology reduces costs and adds flexibility to what can be offered, all with minimal impact on a business’s existing structure. To successfully compete in the industry, open APIs should be an integral part for any financial institution’s strategy.
At ONPEX, the financial services we provide to our clients are fully API-based. With our financial solutions, such as multi-currency IBANs, seamless FX, European SEPA and cross-border SWIFT payments, businesses are enabled to improve and create their own financial services. This helps our clients to no longer be restricted by outdated legacy systems. Our clients simply pick and choose the services they need and only pay for what they used.
To learn more about how APIs can benefit your business, visit: https://onpex.com/