Today, the fintech industry is continuously disrupting the financial services ecosystem. They are enabling the use of automation to deliver an enhanced customer experience. One such example is API banking. APIs help banks in increasing customer satisfaction, meet the ever-changing needs of customers and provide secure banking solutions.
Banking, as a concept, has been around for ages. Today, they are experiencing a digital evolution. Amidst this, traditional banks are finding it difficult to embrace constant change. Here’s where fintech comes into the picture. Their solutions are transforming banks into customer-centric institutions with a digital address.
In this blog, we will explore how banks and fintech are working together to offer improved banking services and why API banking is fintech’s next big bet.
API banking
API banking focuses on giving the consumer an overall amazing experience through applications, APIs and analytics. Over the last few years, API banking has witnessed immense growth. The reasons include a rise in customer expectations, a rise in the regulatory environment and competition from fintech firms.
Implementation of API in the banking sector
APIs enable ‘easy access’ to banking services and data. They have the transformative potential to become agents of disruption. APIs can help in enabling compliance and simplifying legal systems. They provide an opportunity to innovate and be more efficient. The end customer reaps the benefits in the form of better banking products and services.
Banks are now taking initial steps to enhance their capabilities in terms of business expansion, technology development and customer engagement. Today, India has many tech-first banks. The primary goal is customer-centricity and the vision is to be customer engagers, instead of product pushers.
Fintechs are using API banking services to:
- Control, analyse and track all financial movements in one place
- Give account balances in real-time
- Process faster payments
- Reduce administrative hardships
- Provide enhanced visibility of cash flow
- Have higher flexibility
- Streamline financial services
Data analytics and API banking
Banks can collect data related to customers and create tailored products and services. This can be done with the help of fintech. Fintech firms can offer innovative solutions and better technology that eventually lead to customer delight.
The payment industry is trying to leverage the benefits of API banking and data analytics to create relevant solutions and personalised offerings for customers.
Bottom line
The banking industry is all set for yet another digital revolution and they will need APIs as their arsenal. As customers become more connected and technologically advanced, banks and fintech will succeed only when they successfully innovate new solutions for traditional problems. The financial institutions of the future will stand only if they can keep up with the growing digital transformation.