Maximizing Banking Opportunities with Third Parties Integration Using Financial API

Third parties integration using financial API, learn how it can help businesses take advantage and deploy digital technologies efficiently.

It has been a pain for Financial Institutions (FIs) when they need to integrate new applications into the existing IT infrastructure. Banks use 1000 different applications. This will slow down the development journey of financial institutions, drains resources as well as hinders customer experience.

Recent technological advancements have significantly broadened consumer access to financial services in recent years.

As people’s behavioral patterns change, the FinTech industry is actively pursuing innovative initiatives such as open banking APIs to align with evolving expectations and demands.

The rapid expansion of open banking APIs, also known as Financial APIs, in the financial technology ecosystem has created opportunities for the emergence of numerous new financial apps and services. This transformative trend is reshaping the daily interactions of millions of individuals with their finances.

In this article, we will look at three reasons why FIs should adopt Open API in this transformative, digital world and how Trisilco IT has embarked on API integration.

Highlights:

1. Open API is shaping the future of financial services
2. Revolutionizing the Finance Industry
3. Central Bank issues Policy Document on Publishing Open Data Using Open API

API stands for Application Programming Interface. API is a software application that allows two different digital systems to interact with one another. Within the financial services sector, APIs function as intermediaries connecting institutions holding consumer data, such as banks, with entities seeking access to that information. Overall, APIs offer a quicker, more secure, and cost-effective means of sharing financial data.

Open API Is Shaping the Future of Financial Services

Open APIs enable Financial Institutions (FIs) to seamlessly integrate their financial data with third-party services. This has evolved into a best practice for facilitating the exchange of financial data between third-party services and financial institutions.

It enables the sharing of information in real-time while also offering control over what specific information is shared. This will benefit the commercial clients that manage multiple accounts, ensuring that the information sharing is up to date.

These APIs empower consumers to swiftly and securely share their financial data, paving the way for the development of entirely new financial tools that enhance the overall user experience. Banks can extend and upgrade their products and services efficiently, minimizing the expenditure of time and resources. The utilization of Financial APIs has the potential to rapidly elevate expectations and reshape the landscape of the financial services ecosystem.

Expense tracking firms, money lending entities, financial planning companies, and other non-banking financial institutions leverage the opportunities to use open banking. The safe exchange of financial data facilitates FinTech companies in providing highly personalized and client-centric financial services.

In other words, it can improve the organization internally as it can ease banking and payment-related operations. The IT employees can be more efficient and productive, giving them more time to focus on other tasks, as API can assist in easing the management and data integration. It reduces the burden associated with other integration projects.

FIs can integrate new technologies seamlessly even without the need to go through the actual cost of the expense which could be expensive. The need for change during unprecedented times has accelerated corporate banks to use API, a shortcut for software developers to make it easier to build new applications.

Open API can reshape the credit landscape as well and enable seamless integration with credit rating agencies (CRA). It is known as Credit API. Credit APIs make it easier for banks to automate loan origination processes by seamlessly integrating credit checks and verification.

This led to quicker and more streamlined approval processes for loans. The purpose is to cross-check every piece of information provided by customers during loan applications or account openings for fraud prevention.

Revolutionizing the Financial Industry

As financial services become more connected and customer expectations grow, APIs have become a powerful force driving the transformation of the fintech ecosystem.

Open APIs are changing the financial industry in a variety of ways. Below are some of the examples.

A) Enabling Seamless Integrations

Traditional procedures like checking account balances, or making payments have been significantly sped up. Therefore, APIs play a pivotal role in fostering seamless integrations between different financial systems and applications.

By offering standardized methods for communication and data exchange, APIs enable fintech companies and FIs to link their platforms with diverse banking systems, payment gateways, and third-party services. This smooth integration empowers businesses to enhance services, streamline operations, and provide a superior user experience.

B) Accelerating Innovation

APIs act as catalysts for innovation in the fintech sector by allowing developers to utilize existing infrastructure and build upon it, rather than starting from scratch. The use of APIs enables both fintech startups and established entities to quickly create and implement new solutions, products, and services. This agility drives the development of innovative financial tools, including digital wallets, peer-to-peer lending platforms, and more.

C) Enhancing Collaboration

Open API standards play a crucial role in fostering increased collaboration between FIs and fintech companies. Through partnerships, banks can harness APIs to offer innovative services that were not traditionally available. This collaboration often results in the creation of more integrated services, delivering consumers a smoother and more seamless financial experience.

D) Enhancing Customer Experience

In the digital era, customers expect convenience, personalization, and immediate access to financial services. APIs empower both fintech companies and FIs to meet these demands. Through integration with external data sources, APIs grant access to crucial information like account balances, transaction histories, and credit scores.

This data enables fintech firms to craft personalized experiences, provide tailored financial advice, and offer on-demand services, all while prioritizing data security and privacy.

E) Driving the Financial Industry Forward

By adopting Open API Banking, Malaysia can propel its financial industry into a new era, positioning the country as a leader in financial technology within the region and globally. Malaysia is in a prime position to lead this transformative revolution in Southeast Asia.

Central Bank Issues Policy Document on Publishing Open Data Using Open API

Malaysia has introduced a non-mandatory framework for open banking, with the Central Bank acknowledging the advantages of standardizing Open API initiatives for the banking and financial industry. This includes the improvement and enhancement of third-party experiences in accessing Open APIs published by various providers.

The policy allows banks the option to opt in rather than mandating participation, though this stance could be subject to change in the future. The focus areas for Open APIs in the financial services sector in Malaysia are identified as Motor Insurance/Takaful, Credit Card, and SME financing.

Such an approach can promote greater usage and offerings by third parties, leading to efficiency improvements for both customers and businesses. Leveraging on standardized Open APIs significantly shortens the time-to-market for new solutions as third parties are able to rapidly build on existing systems.

Financial institutions are encouraged to adhere to the Open Data API Standards in developing Open APIs, which include the following standards (a) API Architecture Standards; (b) Data Standards; and (c) Security Standards.

Further details of this information are provided in the Policy Document and it can be found here.

Trisilco IT Transforms Operations with Cutting-Edge API Integration

As we embark on this exploration of APIs and their role in today’s digital landscape, let’s take a closer look at how Trisilco seamlessly integrates API into one of its product offerings, enhancing user experiences and paving the way for a more connected future.

Trisilco’s Syndesis B2B is a comprehensive B2B integration platform that helps FIs or businesses of all sizes automate and manage their B2B transactions with ease. In other words, it can ease and expedite their credit loan application process, as compared to the traditional approach.

FIs usually have their own Loan Origination System (LOS) for their loan credit application process. It is done to manage and automate the loan process starting from application submission to loan disbursal.

Where and how does API come in and what does it do?

If FIs already have their own LOS system, it can be integrated with Syndesis B2B using our comprehensive API suite (using JSON structured API) which allows quick and easy integration. It can transfer the data into Syndesis B2B without effort for double entry.

Their interface and our API suite will always be communicating. So, all the sending requests such as blocks of data for new credit applications, principals’ approvals, report retrieval, or absolute credit decisions can run smoothly and transfer data in the blink of an eye. All the self-serving digital journeys through your website, mobile apps, or kiosk can be integrated with our Syndesis B2B as well.

Open APIs Is a Game Changer and It’s Here To Stay

The landscape of finance is continually growing. With the emergence of digital banks and the rise of cryptocurrencies, the financial world is undergoing a substantial transformation.
The growth factor is due to the continued adoption of fintech and API solutions by FIs and rising consumer demand.

Open APIs have revolutionized the operations of FIs, transforming how they engage with customers and collaborate with third-party partners. Their central role in reshaping the industry is poised to persist, driving ongoing innovation in the financial landscape.

In the coming years, businesses that embrace a well-rounded API approach, covering strategy, operations, talent, technology, and implementation, stand to achieve higher revenue, foster growth, and position themselves at the forefront of a dynamically transforming financial services industry.