APIs in fintech, payments and banking: where the synergies are born

Quppy
4 min readFeb 16, 2023

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How APIs could fast improve your financial business of any kind

In the financial ecosystem, both banking and fintech APIs allow banks and financial institutions to add state-of-the-art technology features that improve the user experience in their applications.

What is an API in banking?

Banking APIs are a set of protocols that enable secure communication between your bank’s server and client devices. It helps customers communicate with bank staff through the bank’s app, simply with an Internet connection.

As all interaction involves conversations and the transfer of money-related data, banking APIs require strong authentication and secure encryption.

On the back end, these APIs connect developers with payment networks to display payment details making them an essential tool when it comes to BaaS (bank as a service).

What is an API in fintech?

Fintech APIs are interfaces that help applications interact with relevant financial data and services available on the servers of an organization/company/bank.

For example, banking APIs mentioned above are a variation of fintech APIs. When the banking API is integrated into the application, the account holder can access all information related to the personal bank account, make transactions and use services such as loans, bill payments, etc. For each function, the API consists of separate functional modules. These modules help the application communicate with the bank’s server to offer customers the access to various online banking services.

How do fintech and banking APIs work?

This is how exactly the API lifecycle for providing banking and fintech related services looks like. First, the developer registers an account with the fintech API provider. Then the developer receives an API key from the provider. The developer starts making API requests to the provider’s server. The request may include: checking the account balance, transaction history, money transfers, etc. The server starts processing the request. When completed, it returns back with a response to the application. The response may include: account statement, transaction details, money transfer, or something else.

What benefits do APIs bring to fintech and banking sectors?

Improving overall costs

When it comes to numerous banking services, the concept of developing an open API has proven to be effective. Integrating them into various applications allows to track all the important information about the transaction, as well as related issues on the bank’s website to check.

Encouraging data sharing for a better user experience

Banks are very sensitive to their users’ account information and much more conscious when it comes to sharing their customers’ data. With the integration of the Digital Banking API, users get full control over their data. From now on, customers can require banks to allow their data to be shared with any third party provider.

APIs that banks always need

Since everyone is interested in the development of fintech applications, the likelihood that APIs in the banking industry will become obsolete is very small. As a result, there are still hundreds of fintech startups that demonstrate customer demand for abundance. Even when it comes to business, these banking APIs offer more services.

More services, more competition

Where the use of APIs has benefited users, it has also increased competition in the marketplace. This, in turn, drives up prices in the financial industry. For example, users are starting to use financial services to compare offers between banks and other financial and payment institutions.

Fast and efficient operations

The methodology of these APIs allows banks to serve their customers quickly and efficiently. These APIs allow customers to manage banking transactions through mobile, online services or device wallets thus preventing customers from visiting banks to complete any operations.

How do fintech companies benefit from APIs?

Reducing development costs

APIs eliminate the need for developers to build application features from scratch, which significantly reduces work time. Savings are thus also performed on the technical maintenance level as APIs are the key to building a microservices application.

Accelerating the development of new features

APIs are critical for rapidly expanding the feature set of any fintech application with minimal development time. For example, instead of building a payment module yourself, why not just get an API like Paypal or Visa? This can save developers’ valuable time.

Yet APIs also allow to offer features or services that are not normally possible. For example, large banks have a huge advantage over their digital counterparts as they are licensed to offer services such as deposit insurance and lending. Unfortunately, if a fintech company wants to provide them in your application, it has to go through an expensive approval and licensing process. The solution is “banking as a service” (BaaS). This scheme allows third parties to access bank services through API calls. Through it, anyone can offer banking services without having a license.

Helping with compliance

APIs also help with strict regulations like the GDPR and PSD2 by exposing their data to governments and regulators. They address the issue of privacy and security when exchanging such sensitive information with outside parties.

Moreover, APIs are also a key component of many complex compliance processes such as user KYC. Finally, RegTech APIs can streamline the process by automating processes such as compliance checking and data management.

The Quppy API: unlimited digital currency solutions within your app

APIs are important building blocks of successful fintech applications and services. Quppy provides a customized API for various fintech solutions for a fast and efficient product development at a high security rate and compatible pricing.

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