Banking on APIs: the future of the finance sector

The finance sector, widely regarded as a trend-setter for new and emerging technologies, is once again leading from the front. Since the rollout of the “open banking” initiative, which allows financial data to be shared between banks and third-party service providers, the pace of innovation in the sector has skyrocketed.

Credit scoring has become streamlined, anti-money laundering (AML) techniques have become more advanced, real-time trading is the new standard, and financial services companies like banks are competing to provide the best customer experience.

It’s not just consumers that stand to benefit either. In the UK, where the concept of open banking experienced its first real breakthrough, the NatWest Group reports that 66% of businesses save roughly 150 hours every year on operational tasks thanks to open banking initiatives.

All of this is made possible through the use of Application Programming Interfaces, or APIs. APIs are software-based intermediaries that allow different applications to communicate and share data securely and efficiently. Not only does this create a more “joined up” financial ecosystem for business and customers, it paves the way for innovative new services, solutions and business cases.

Financial institutions like Standard Chartered have even established API marketplaces to streamline the integration of third-party services, promoting a more competitive and customer-centric financial ecosystem. This interconnectedness ultimately leads to improved user experiences and operational efficiencies, as well as a competitive edge for those finance companies with the ambition and resources to take advantage.

Payments and transactions

APIs have already revolutionized the way payments and transactions are handled in the financial sector, enabling smoother, faster, and more secure processes. For instance, companies like PayPal now release APIs to allow developers to integrate payment gateway services seamlessly into various platforms, allowing users to initiate…