The advent of API(Application Programming Interface) in the banking sector has brought revolutionary changes over the last ten years. It is the perfect way of seamlessly connecting the functionality of two applications via APIs. The exchange of information in the banking industry has become immensely more accessible.
Did you ever think about the technology behind the online payments that we make through our phones? Neither the mobile phone nor the payment application has our banking information. Nevertheless, we confirm the payments in a hassle-free manner. So these information exchanges take place with the help of banking API integration.
This write-up sheds light on the open banking API, its implications, and more. Besides, we’ll thoroughly discuss the types of API and its implication for the banking industry. Stay tuned to this blog and get access to one of the best API providers.
API BANKING HISTORY: THE EXPONENTIAL HIKE IN THE API BANKING DEMAND
The exchange of customer information through banking APIs is known as the term API banking, and there has been a tremendous rise in its demand in the market. In 2016, the Competition and Markets Authority (CMA) in the UK raised the demand for data access from several banks for third-party applications. These banks decided to share access to their customer’s information with them at that time. This decision was a small step toward the open banking API ecosystem. After a few years, there was another advent known as PSD2.
However, this PSD2 invention has helped significantly in the precise development of the open banking API. In addition, RBI (Reserve Bank of India) also introduced the UPI (Unified Payments Interface) payments that eventually played a vital role in increased demand for banking APIs in India. Forbes declared 2017 as “The year of the API economy!” Consequently, this brought ample new opportunities. Since then, the demand for API providers has kept rising. Moreover, API introduction has also changed the way banks and fintech companies work.
TYPE OF APIs
APIs are broadly classified into four categories which are majorly used in web-based applications. Let’s check out its types:
1. PUBLIC APIS
A public API can be used by any developer or business outside the organization. A business itself crafts the strategy that further allows them to share the data with other businesses so that it can offer it as public APIs. Moreover, an enterprise can also monetize its APIs and earn ample profit.
2. PARTNER APIS
Partner APIs are only available to the selected and certified API users or developers aiming to make the business activities seamless. For example, if the business goal is to share the information or data access to some selected clients only, an API partner is the best that shares data with those parties only. However, partners have all rights and licenses to access APIs.
3. INTERNAL APIS
Internal APIs refer to the one which is only used in the enterprise to exchange the data within the internal business. For instance: the HR department and organization’s payroll process can use internal APIs.
4. COMPOSITE APIS
Composite APIs are used to address the complexities of tightly API behavior. Besides, it enhances the speed and performance of the APIs ecosystem. Doesn’t it sound great?
The Working of Open Banking API
The working of API banking is as simple as ABC, and we have explained it hassle-free. An API provider significantly assists several companies, such as neo-banks lending firms (fintech) and service aggregator companies (Uber Zomato). The working model of banking APIs is explained below:
● First of all, the banking organization opens the core banking platform to give access to third parties.
● Now, the third-party platform integrates the bank APIs to develop a potent connection with the central banking system.
● After this, the third-party platform issues a request to gather needed data from the banking servers to perform its functions. This process is known as API calls.
The third-party platform enables users to enjoy a comfortable interface. The API banking transactions and functionalities become smooth. In this manner, the integration of single third-party APIs becomes easy for financial institutions and banking organizations, and as a result, they enjoy getting access to various banking APIs. The perfect example of banking APIs is payment processing, account information, account authentication, and analytics.
DigitalAPICraft: Best Platform for Banking APIs
If you are looking for open banking API services, contacting DigitalAPICraft is the best option. We help you build an active, vibrant, and hyper-personalized Banking API Ecosystem. In addition, you can leverage the benefits of our One APIMarketplace for banking. Jumpstart your banking innovation without a customized banking APIs solution. For more information, connect with our team.
API banking has successfully brought innovations in banking, healthcare, and other industries. We can’t deny that it’ll grow exponentially in the coming years. That is why all the banking institutions should implement the API ecosystem to automate the operations of your organizations. Be sure that you take the API customization services from a reliable and professional API provider in the market. You can consult DigitalAPICraft and discuss your requirements with them. They deliver ready-made API solutions as per your business requirements. They also help you to stay ahead of the open banking curve.