8 Benefits of APIs in Banking

The pace of technological evolution in financial services has been accelerating at a meteoric pace. With banks and fintech companies developing new products and services at lightning speed, customer expectations continue to grow. Given the constant digital innovation, such as the introduction of Bitcoin checking, it becomes paramount that banks keep up and meet these challenges. APIs will help.

Application Programming Interface (API) allows different applications to connect and communicate with each other. Such digital communication lets financial institutions easily leverage the capabilities of their core system and the ecosystem of their third-party applications. APIs are commonly used in lending, digital banking, compliance (KYC/AML), reporting and other bank operational areas. They also help create and customize end-user solutions that fit the specific needs of the bank and expand opportunities to attract and retain customers.

BankWise Technology (BWT) recently helped a bank client take advantage of a Small Business Administration API to automate and manage the bank’s Paycheck Protection Program (PPP) loan portfolio. The bank had generated a significant volume of PPP loans. To help manage the accounting for these loans, BWT created a middleware application that worked with the API that allowed the bank to segment the loans by a variety of attributes and group them for sale in the wholesale market. The middleware that was developed by BWT provided the bank the increased functionality to manage their PPP loans while simplifying product management, compliance, accounting, and reporting tasks.

The implementation of an API can solve a multitude of bank-related issues. Consider these 8 benefits that will help your financial institution stay on the leading edge of technology.

1. Enhance Customer Experience: Your customers depend on you for banking, insurance, wealth management and more. Easy 24/7 access to timely, accurate account data is the key to a strong client relationship. When customers have an easy path to secure, accurate information, they can complete their financial tasks quickly and move on. When their bank delivers the solution to meet their needs, they can rest assured that the bank has their best interest in mind.
2. Provide Data Accessibility: Given the wide variety of core systems (e.g., FIS Horizon, Fiserv, Jack Henry) and third-party applications that banks use, it is critical that your applications communicate with each other. An API can help extract siloed data and present it in useful ways. With better access to data, an API drives meaningful business intelligence and leads to improved efficiency and increased revenue.
3. Integrate Legacy Systems and Third-party Applications: If your bank works with disparate systems and third-party applications, getting access to all the resident data can present challenges. If your systems don’t communicate with each other, you cannot tap the wealth of data you have collected. APIs can solve the data-communication challenge, thereby enhancing your investment and the overall value of your core system and third-party apps.
4. Opportunities in Product Development: Banks and credit unions often develop products in house and distribute them through their proprietary sales channels. With the advent of third-party products and APIs, and if you chose, you can leverage those products and market them to a wider audience through the financial marketplace ecosystem.
5. Functional Portability: APIs are there when you need them. If they are designed using standards such as REST and Open API, your applications can work together as new business opportunities arise. This accessibility and modularity add increased functionality to interface development and purpose.
6. Save Time with Automation: Eliminating manual tasks is a top priority for all banks. Hands-on efforts take time and can lead to inaccurate data, misinterpretation and lost opportunities. APIs automate manual tasks such as spreadsheets and human analysis, while providing better control of data input and output.
7. Increase Staff Efficiency: All staff face increased pressure stemming from the sheer volume of projects, customer expectations, increased regulations, and ever-changing compliance requirements. APIs can help IT and operations staff work faster and smarter, leaving them more time to concentrate on other projects. APIs help lessen the data integration and management burden, often associated with cumbersome data integration projects.

8. Tighten Security: Using accepted programming standards (e.g., REST and Open API) to develop APIs helps place an increased emphasis on security. Their open architecture allows for better security, monitoring, and performance which in turn leads to better security as they can be managed as necessary.

The Future of API

Where do we go from here? The fast pace of technology is both exciting and challenging. Significant opportunities await those banks and credit unions that leverage the dynamic changes in the financial services environment. The development and deployment of APIs play a critical role in adapting your institution to this ever-changing environment. An API ecosystem is a company asset that provides long-term functionality and helps you adapt to this rapid acceleration.

Let’s discuss how API solutions can help automate many of your bank’s common tasks.  Your staff will not only be more productive, but they will also have more time to focus on other project priorities in your IT and operations queue.

Please schedule a time that is convenient for you to learn how APIs can help your bank or credit union continue to move forward.

About BWT

BankWise Technology (BWT) is a New York – based fintech company focused on providing custom applications and plug-n-play interface modules for community banks and credit unions. The BWT team has combined experience of more than 60 years in the financial services industry and a variety of expertise from front and back-end application development to planning and implementation. Our staff has an extensive background in working with community banks; many worked in-house for a leading, regional community bank in New York. Our work continues to assist these forward-thinking financial institutions to continually look for ways to increase operational efficiency while developing new products and services that are unique to their market. From managing PPP (Payroll Protection Program) loans to Bitcoin rewards checking and FIS Horizon® core system interfaces BWT can help.