The API Led Evolution of Fintech – An Insight

Posted by Pratik Maheriya on / November 1, 2016
The API Led Evolution of Fintech – An Insight
 

The world has more than 25,000 operational and Active banks presently. As Mobile Money and other Financial institutes have innovated ways which substitute banking, it has become very crucial for Banks to offer all possible services to its subscribers with visceral and intelligible ways. Considering all these aspects, FinTech is going to be the most booming and innovative domain in upcoming years.

There is no doubt, that technology will play a crucial role in all these innovations and ameliorate old legacy systems in financial institutes. One of the key factors to look out for would be the APIs (application programming interface). APIs are allowing organizations to build products swiftly and in such competent ways that can win over other rivals in the FinTech domain. Banks have come up with the concept of Open APIs which they are offering to institutes and startups that work with them closely and help them to increase revenues in secure ways. Let me explain with an example - The European Union has agreed to adopt a proposal for revising Directive on Payment Services (PSD2). This proposal will enable new services which can be referred to as Banking-as-a-platform which enhances consumer protection and aims to boost the growth and use of innovative online and mobile payments. The use of public APIs would Speed up the digital strengthening of banks that is sparked by the rise of FinTech companies, and propel them into an era of open banking.

The Banking industry is vast and disconnected due to countries and their independent regulations. However, the cards issued by the Banks are not bound by such restrictions. Most of these Cards are associated with Visa or Mastercard, thus allowing cardholders to make transactions from anywhere in the world. Bank holds the control of its customers with limited services, however, Visa and Mastercard has successfully amalgamated the e-commerce and Payments domain. With the help of open APIs, Visa and Mastercard are ready to float out their function as FinTech providers. For example, Visa has made 150+ distinct services available through open APIs platform, which covers the technology to create web interfaces, physical card scanners, get real-time Forex from Visa and many other tools for developers to apply their ideas, while developing exciting new FinTech products.

Taking a cue from Visa and Mastercard, if Banks open up their APIs, it will allow Businesses and Customers to have access to their accurate financial data in real-time. Open APIS will enable customers to analyze and save on their accounts and retrieve more personalized resources for taking the right call when it comes to banking.

While APIs are the key to change the financial industry, there is also a flip side. One known issue is that, for each different software language used in the product, API is duplicated and hard coded at times. It incurs multiple code management, versioning, and additional efforts. Another limitation could be different APIs work on different speeds depending upon the Function and processing of data required to accomplish the task. Businesses should be aligned in a proper way with respect to APIs and their operational behavior in order to deliver an efficient and a hassle-free experience to end customers.

In conclusion, I would say that although Technologies like APIs have some bottlenecks, they improve with time. They are the next big thing to open up the FinTech domain to participants like Banks and Payment aggregators. The Open APIs will lead FinTech domain to a marketplace where financial and other businesses can easily catch out and employ needed API-based solutions, free of hindrance.

 
Pratik Maheriya

Pratik Maheriya

Pratik Maheriya handled pre-sales for APACregion at Panamax. Having a bachelor’s degree in Computer Engineering, heshouldered a wide range of responsibilities like support, project delivery, businessdevelopment, strategy planning and consulting on projects across the regions ofAfrica and Asia for more than 6 years. Pratik was a passionate technology loverand dynamic professional with expertise in FinTech and telecom technologysolutions.