The Most Important Thing in FinTech: Advent of APIs (Banking APIs Are Real Too)

I am back to writing about one of my favorite topics—APIs. In 2013 and 2014, I wrote some of the very early pieces on how APIs are being used to build next-generation products and allowing developers to reduce the time to market. I also talked about how banks will take a very long time to open up their APIs. Open APIs would allow third-party developers to create helpful services and tools that customers can utilize. Some banks have started this journey and we will discuss that in our upcoming reports and other announcements. But to be technically accurate, right now, banks are just looking to expose their APIs to some startups and companies that are working with them closely. In simple words, they aren’t like Stripe or Facebook APIs which are completely open and fully self-serve. Think about the startup contests, accelerators that banks sponsor. Also, think about Silicon Valley and London startup visits by banks and other engagement models. Now that every now and then they are narrowing down on new startups to partner, they need to make available their banking APIs that the startups can integrate with and/or use for their applications. On this scale, things such as these would take years to implement.

Before I go further, let me talk about some examples so it's very clear how it actually helps when you open your APIs:

  • At the moment, commercial software is used for bookkeeping by many small and medium-sized enterprises, but for the most part, their transaction data has to be added manually. The introduction of an API from their banking service provider would allow businesses and customers access to all bank data in real-time, ultimately giving them more accurate and up-to-date information on finances. With this initiative, customers will be able to compare and save on their accounts and have access to more personalized resources for making the right decisions when it comes to banking.
  • Third-party lenders would now have access to historic transactional data to determine a borrower’s risk level, hence, customers will have access to better loan terms.
  • Collecting as much data as possible and finding the most efficient ways to use it to the benefit of the customer—that is the ideal idea for a bank. The customers of a bank create a massive amount of data that often goes underutilized, and using technology, we can allow customers to have access to refined and usable data so they can improve their personal financial situation.

Now, let’s get to the most important part of this research article—the Doers who are making their APIs available. Here is a curated list by segments. (Do let me know if you have any suggestions.)

Braintree

Braintree’s Partners APIs provides users with an integrated way to start accepting payments using the Braintree payments gateway. The API allows users to sign up seamlessly from within applications and get instant approvals so merchants can easily receive the credentials on a user’s behalf, basically everything required to process a transaction. It becomes easier for merchants if their customers are already Braintree users, in which case users only need to sign in to initiate payments. For existing Braintree merchants, the Partners API enables developers to build valuable features in their apps like data visualizations and reporting.

CardConnect

The CardConnect API allows secure acceptance of a wide-range of credit, debit and alternative payments. Instead of a high flat rate, CardConnect uses interchange plus pricing as processing costs. The API offers features like next day funding, certified PCI level 1, patented tokenization, recurring billing, online bill presentment, hosted payment page and fraud protection as well. From Yen to Euros, CardConnect has you covered. CardConnect’s partnerships throughout the world allow it to offer global pricing and operate in different currencies internationally. CardConnect’s reach includes Canada, Japan, and 18 European countries with more in the very near future.

Dwolla

Dwolla is an ACH processor and payment network that provides a web based platform to send, receive, and request funds to, from, and between any entity within the United States. Dwolla’s ACH API provides two types of integrations for platforms: a branded offering, which offers Dwolla-branded experiences and payment flows, and its new flagship solution White Label, which allows for seamless experiences and custom payment flows.

The platform specializes in marketplace collections or payouts, FinTech platforms, and enterprise business. The API provides developers with the functionality to send, request, and retrieve account history; automate realtime services via webhooks; verify customer identities and bank accounts; allow platforms to create accounts and hold balances; and/or enable money transfers between bank accounts.

Google

The technology giant offers exclusive Wallet APIs which enable the integration of its popular Google Wallet services. The APIs help streamline purchase flow across mobile apps and websites. Two major API offerings include:

Instant Buy: this API provides a cloud-based method to access and store payment information. It increases conversions by streamlining purchase flow and reducing the amount of information customers need to enter. It can integrate with existing payments infrastructure and offer payment services quickly, easily, and free of charge.

Wallet Objects: this API is a simple platform to connect businesses to millions of Google users and showcase loyalty programs, offers, and more. Businesses can engage with customers through the always-available platform with location-based notifications, real-time updates, and messaging. Moreover, it becomes easier to manage updates at scale through the cloud.

Intuit

The company offers the quickbooks Online API which allows developers to leverage the huge amount of financial data that businesses create within quickbooks. Intuit also offers the Customer Account Data API which, along with the QuickBooks Online API, provides developers with programmatic access to data from more than 19,000 financial institutions. Using these APIs, developers can create third-party applications for QuickBooks which can be offered to consumers through the Intuit Apps.com app mar ...

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