We can find APIs everywhere around us if we just look. For instance, a restaurant's website might include Google Maps so you can locate it. An API is utilized for it. Additionally, an API is used to create live tweets that provide additional information while you read an article.

But the arrival of API Banking will bring about the actual change. With it, banks can now give their customers a better digital experience while also guaranteeing the absolute security of their data. However, they are now able to collaborate with Fintech businesses and, for instance, insert their banking APIs into non-financial apps thanks to API access.

By responding swiftly to changing consumer expectations, a bank's appeal can be increased by implementing an Open Banking API. What is it, though, and how does it operate?

We will go over all you need to know about API banking in this blog post. So continue reading if you're ready to grow your company.

How does API banking operate and what is it?

An API (Application Programming Interface) is essentially an interface that enables the synchronization, linking, and connection of any application with the service database. You could say they act as a link between a service and an app, ensuring safe data transmission without the need for outside parties.

Meanwhile, the term "API banking" refers to a collection of protocols that makes a bank's services accessible to other outside businesses via API. By combining their services in this way, banks and independent businesses can provide their clients with a significantly larger choice of services than they otherwise could.

Making a mobile banking app for users is one of the most prevalent uses of an API in banking. Customers can use these apps to pay bills, transfer money, check account balances, and more directly from their phones. However, clients may also use these programs to keep track of their spending, create better budgets, discover new methods to cut costs, or purchase extra services from independent businesses.

The advantages of API banking

Banks and credit unions (CUs) invested in or created APIs to the tune of 47% in 2021, up from 35% in 2019. In 2022, another 25% intend to make investments in this technology. But what exactly is so appealing about banking API?

The ease with which banks and other financial institutions can share data, interface with systems, customize their services, or add new services to their portfolio is perhaps the most evident benefit of APIs. Therefore, banking API enables businesses to do just that while also enhancing internal security at a time when data openness and simple sharing between parties are vital (all banking APIs have to meet strict compliance and security requirements).

However, there are a few more advantages. For example, the banks may mine a wealth of information from the massive amounts of data the API can collect and store to better customize their services to the needs of their consumers. Customers are less likely to use your competitors' products and services the more customized they are. Additionally, since the data is gathered automatically, you are no longer need to spend time manually managing the data.

Additionally, working with other banks and independent institutions can be highly rewarding. Banks are able to promote to a far larger audience by acquiring access to consumer data from other collaborating financial organizations, particularly other banks. Banks now have a plethora of opportunities to create their own integration-based financial services.

APIs are not only incredibly helpful for businesses, but they are also quite valuable for consumers. Using an app reduces the amount of time needed for transactions, provides any service or product a customer may require immediately available, and aids in money management.

Additionally, by removing many administrative barriers for the users, including the documentation required to submit a loan application or check one's creditworthiness, these apps helped make banking services more available than before. Customers can save a ton of time by accessing other relevant services (like insurance) directly from the app rather than having to spend time looking for a supplier. Instead, they can obtain a personalized offer right from the app.

Is it surprising that researchers anticipate the worldwide Open Banking market to reach $43.15 billion by 2026, given all those advantages?

What is the outcome?

We have added new features for individuals and companies to the app, including:

  • New types of transactions (SPOT+ and NETTO)
  • An expanded admin panel
  • Bank integrations (PKO BP, Alior, Santander)
  • The option to make deposits,
  • SMS authorization of critical actions,
  • The option to share an account and assign roles to individual users,
  • A widget that allows partners to present TMS platform courses on their websites,
  • A feature that allows monitoring the flow of money within the organization,
  • Accounting process automation,
  • Enabling partners to execute transactions using an open API.
  • Our team has also optimized the platform’s overall work by fixing bugs, reducing the likelihood of new ones occurring, and optimizing the deployment process.
  • Currently, we are working on full internationalization of the application and adapting it to enter the English-speaking markets, plus implementing a Polish product to one of their product.

We also keep working with them on maintaining, optimizing, and developing this platform.

The future of API banking

While banks and financial institutions looked at API banking with some dose of reserve and hesitation at first, the benefits of those speak for themselves. From frictionless payments to more secure and simple ways of paying, there are enormous benefits for merchants, payment providers, open banking operators, and consumers alike.

That’s why more and more banks and financial institutions but also Fintech companies, are joining the trend. The number of new Open Banking customers has increased by 60% over the last year, totaling 3.9 million consumers and 600,000 small businesses. With 1 million regular and active users joining Open Banking every 6 months, it now has over 4.5 million regular users.

A source of centralized data for artificial intelligence using banking API

The ability of institutions to learn more about their clients and subsequently create an exhaustive profile of them can be significantly improved by integrating several services into one location and collecting user data there. However, the massive amount of data can also be used to train machines with artificial intelligence to process and comprehend each customer's needs.

As a result, AI may be a huge benefit to the financial sector, assisting in consumer segmentation and conversion, business trend prediction, and problem identification. Additionally, AI could relieve workers of some tedious manual activities (such as lead scoring, risk assessment, or manual evaluation) and manage massive data for them, enabling businesses to customize their services for each individual consumer.

We should anticipate to see more applications for artificial intelligence in the banking sector in the future because the technology's potential hasn't yet been fully realized (more accurately, we're only beginning to learn about its complete capabilities).