API technology represents the future of the banking industry. While APIs have been used in the business world for over 20 years, it is currently becoming more prevalent in banking, as financial institutions implement more modern technology solutions. If you want to stay ahead in the market, you need to understand how APIs work and how they are impacting the overall industry.
What Is A Bank API?
An API, also known as an “application programming interface,” is a group of tools and protocols used to build software and applications. In terms of banking, APIs allow programming experts to create applications that help financial institutions exchange data with third-party financial technology organizations.
APIs in the banking industry give financial institutions the ability to connect with businesses and consumers, transfer information at a more convenient pace, and expand the number and breadth of services they can offer. Given the success of APIs across the globe, it could have a wide variety of implications on the future of the banking market.
Why Do APIs Matter?
API technology has made a huge difference in the way businesses operate. As a major resource for fostering innovation, APIs give companies more freedom than ever before to create new products, provide new services, and improve their reputation within their industry. Some sources indicate that most businesses with integrated high-level API technology feel they are more successful than businesses that use only basic or no APIs.
More financial institutions have recently started experimenting with API banking possibilities. This is because of the potential they have to transform the industry and improve the experiences of bankers and customers over a long-term basis. If banks continue moving toward this type of technology, the industry will start to see changes in the way data is handled, and the way services are integrated. This could increase cost-effectiveness and efficiency for banks everywhere.
Uses of APIs in the Industry
The use of APIs in banking has only recently started to emerge, especially in the United States. However, API open banking has already become more mainstream in other countries around the world, which means there are many financial institutions currently implementing the strategy and enhancing their customer experiences.
One example of a bank that uses API technology is BBVA, which offers API services to clients in Spain, Mexico, and the U.S. These are open APIs, meaning any company can use them — and BBVA offers you the ability to gather customer information, collect financial statements, view your company’s financial position, and much more. BBVA makes it easy for organizations to access essential information without hassle or delay.
Another example of a bank that uses open banking platforms is HSBC Group. HSBC Group supports open banking APIs and private open banking APIs, that can provide valuable information on business and personal accounts, ATM locations, branch locations, loans and commercial credit cards. Their private APIs ensure the secure exchange of information between businesses and other parties, so that they can protect sensitive customer information.
These are just a few of the many banks that have started implementing and supporting API technology. With the help of this resource, you can change your offering for the better, by building stronger relationships with your consumers, and other businesses.
Transition to Open Banking
The implementation of APIs within the financial industry displays a gradual shift from traditional banking to open banking. Because open banking APIs support the transfer and use of data to improve the customer experience, these conveniences could soon become the norm for banks and businesses all over the globe.
Fintech applications, in particular, have plenty to gain from this transition. The goal of fintech apps is to allow consumers to better control their finances, and APIs will give the application developers the means to improve the services they offer.
Open banking platforms will allow businesses to connect with consumers in a more seamless way than ever before, and it is through APIs that this transition will become possible for financial institutions everywhere.
Embrace API Technology With the Hydrogen Atom
If your financial institution is ready to start embracing the open banking method, we at Hydrogen can help. Our Hydrogen Atom platform will provide you with all the tools and resources you need to integrate APIs with banking processes. A future for open banking at your company is just around the corner with our products, so please contact us to learn more.