Which APIs Integrate Into Your Fintech Project, and How Can You Benefit From Them?

Fintech, or financial technology, refers to the usage of innovative technologies in financial services. The market is booming and is expected to reach $ 332.5 billion by 2028.

The appearance of new services and the ability to perform various operations online resulted in the unification of financial operations in one app or platform. Institutions like banks, investment, insurance providers, payment systems, and credit card companies cooperate to give customers a better experience. Fintech solutions benefit individuals and businesses by saving their time and money, allowing them to manage money operations anywhere if they have an internet connection.

API makes possible many of such functionalities. It is a program that provides communication between two other programs. Fintech app can communicate with a financial institution’s server with its help. API allows programs to use each other’s information for making transactions or modifications.

The usage of third-party APIs has various advantages, such as implementing services without the need to develop the technology from scratch. It will lower the development costs, save time and leave space to improve those services which help you stand out in the market.

Their wide adoption illustrates the importance of APIs for the Fintech sector. In 2020 APIs’ adoption mainly increased because of their wide usage by financial enterprises. Such a tendency was also dictated by switching from common IT infrastructure to SaaS (software-as-a-service) and common usage of cloud products. According to McKinsey, the top 500 companies worldwide will use cloud technology as the prevalent feature by 2030. It requires adopting cloud microserver architecture, for which APIs are fundamental.

In this article, we will figure out which of them is better to implement, depending on the specific type of your project and how you can benefit from it.

The use of APIs in fintech

While you are making an online purchase and your payment is approved, the platform needs to access your bank account. This action can be performed through API, which connects two programs that pass the data to each other and expect a certain action. For instance, a financial app can connect to his bank account through API to access the customer’s balance. This data exchange is quite safe, as APIs separate two entities and don’t reveal the logic nor disclose the principles of financial system work.

Two programs may be written in different languages, their function calls may differ, and they may have other specifications that make communication programs incompatible. API plays the role of the translator.

APIs are inserted into the code, enabling certain actions or providing specific results. Such action as money withdrawal or payment at an e-commerce platform involved a third party – your bank account. The request is sent to the bank through API, which undergoes authentication and confirmation.

After the user provides credit card information while making a purchase and clicks the “pay” button, this data is sent for verification through API to the payment processor. The order is approved only after the app receives the information about successful verification. Through security protocols, API makes sure that no unauthorized requests pass through.

Types of fintech APIs to implement in your app

You can always consider developing your own fintech APIs, which can be further integrated by other companies. But it also requires effort and time, so it is better to count the risks and start with an API strategy. Various APIs have already been developed for you to use in your product if you have decided to add a new feature requiring involvement and information exchange with a third party. You can go through the list and find the one you are looking for or understand which of them can be beneficial for your products and clients.

Financial data providers

Third parties use those APIs to approach financial information like bank accounts. Through the apps can also provide financial services to their customers.

Many banks provide APIs, allowing apps to execute payments, enter accounts, and benefit from security functions.

Payment processors

The APIs of this kind enable any kind of online transaction going through every stage: accepting, validating, and processing. The best example is PayPal.

Digital payments are the most progressive niche in fintech, as more and more financial operations are performed online. A payment processor should be adopted by any fintech app that includes payment functionality. They also deal with every nuance, such as currency exchange, provide security and detect fraud activity.

KYC

Know Your Client (KYC) is used to verify the customers, prevent risks and reach financial profiles executed by financial services. The process helps to prevent fraud by client identification. APIs are widely used for this, as they help to confirm the client’s identity.

Some use biometrics, video questioning, and AI to rich customer data.

KYC APIs perform some processes by automating repetitive tasks, which makes them time-effective. The other important thing is that the client verification performed by such APIs complies with the laws of most countries, so your financial app can operate almost everywhere.

Security APIs

Security is one of the most important aspects of fintech. As cybersecurity attacks become more common and sophisticated, your app should provide your customers with the protection of their personal information and financial assets. Those measures should be updated regularly.

Authorization and authentication APIs are easily integrated into the apps. Apple Face ID or Android Biometric Library are native solutions for biometrics authentication. Additionally, there is also multifactor authentication provided by APIs, which allows you to install another layer of security.

Investment brokers

The most challenging part of building investment apps is the development of the algorithm for market trading. However, you can use broker APIs that already exist in various types. All of them sell assets on behalf of the user. Some of them provide trading in any market you can only imagine. Some specialize in rich stock data, while others give access to crypto exchanges.

Broker APIs can be easily integrated into fintech apps, such as personal finance or digital banking, if you see that investing tools are missing.

Benefits of Fintech APIs

Incorporating APIs can enrich the variety of services of your financial product and give your customers a better experience. They also ensure the security of the data and compliance with the app. While you don’t have to work on the specific function, that can be substituted by incorporating the API. You can devote more time to evaluating your main product and providing your clients with better services. Also, in building a fintech app, your focus should expand to such aspects as cybersecurity, legal issues, and even marketing to promote your product. Thus cutting development costs, you can relocate the finances to those aspects. Some of those functions can also be performed through APIs.

APIs significantly speed up the development process, reduce costs, and empower your product with easy-to-use and necessary tools. Online financial services are one of the booming spheres in the technology market, so with the right product, there is a high chance to gain the leading positions in the niche.