The Fintech APIs to Use in Your Finance Software

The Fintech APIs to Use in Your Finance Software
Today's fintech users expect multifunctionality and uncompromised convenience from their apps. These include payment processing, unprecedented security and fraud prevention, real-time stock updates, instant customer service, smart chatbots with advanced chat features, and social media features such as comments, activity feeds, and notification feeds. Instead of building these advanced features from scratch, developers should consider integrating fintech APIs into their products. In this article, we will talk about the benefits of financial APIs, their use cases, and the things you should consider before choosing an API.

What is an API and How Can They Benefit Fintechs?

APIs (Application Programming Interfaces) are software components that interact with applications to facilitate access to information, transactions, and payments. Companies that provide financial services use APIs to facilitate integration, foster collaboration between financial partners and improve the customer experience.
APIs facilitate the exchange of data between applications for consumers, third-party vendors, business partners, and company employees. APIs are also used to synchronize data across multiple applications. Some examples of fintech APIs include access to account information when logging into a banking app or the ability to make purchases through payment service providers like PayPal.
API benefits for fintech include:
  • Increased cost-efficiency. Generation Z and its successors set high standards for their online experiences. While it is beneficial for them to have multiple banking services, providing these services is costly for banks. For banking institutions, developing a multitude of new features requires a significant investment of time and money. Fortunately, there is a wide range of APIs that enable banks to provide users with multiple services through various app integrations.
  • Regulatory compliance. European financial institutions face regulatory requirements under the European Banking Authority's Payment Services Directive (PSD2). It requires financial institutions and recipients of electronic payments to open up customer data to third-party providers. To comply, financial institutions must strike a balance between exposing customer data to the outside world while maintaining data security. Open APIs are the ideal solution here.
  • Focus on the key features. APIs offer the opportunity to partner with software companies that focus their innovation on the financial sector. Allowing banks and fintech companies to develop new product lines that meet the needs of a much wider range of customers, APIs also enable businesses to open up new markets.
  • Improved customer experience. Customers expect seamless integration between their phone, their computer, and their IoT devices. With APIs, fintech companies can create consistent experiences across multiple channels.

    Top FinTech APIs for Developing a Finance app

    APIs are beneficial for financial institutions in many ways. Let's take a look at some examples of the most common APIs: payment providers, banking information aggregators, and KYC providers.
    Payment Providers
    Stripe. Stripe is an online payments infrastructure that works with more than 135 currencies and payment methods in more than 35 countries, providing multi-functional, easy-to-use solutions for banking, insurance, loan management, and other fintech. Stripe has gained its popularity through secure transactions, user-friendly reporting features, consistent service, and democratic fees.
    Marqeta. Marqeta's open API platform allows businesses to launch and manage their payment card programs working on their behalf with card networks and issuing banks to issue cards, authorize transactions, and communicate with clearinghouses. Marqeta helps companies develop new payment products, streamline payments to vendors and employees, accelerate time to market, and scale across the US, Europe, and Asia.
    MangoPay. MangoPay allows paying in multiple currencies and with various payment methods. All payment flows and commissions are automated with a single contract. MangoPay can be quickly integrated into a payment solution thanks to its open-source SDKs.
    Bank Information Aggregators
    Plaid. Plaid offers several products, including a financial data aggregator for fintech and startups. It's primarily used by fintech and startups based in the US to connect banks and brokerage accounts. Plaid is valued for its efficient fraud prevention, simplified bank account authentication, comprehensive transaction history, user income validation, geological transaction tracking, and custom integrations.
    Yodlee. Yodlee is one of the leading aggregators of financial data and is used primarily by banks and brokers. Yodlee's APIs are known for their broad coverage, as the company provides data from over 21,000 sources around the world, including banks, credit cards, investment accounts, etc. In addition to aggregating financial data, Yodlee's offerings also include account verification, data enrichment, and even a virtual financial assistant.
    Financial Data Provider
    Thomson Reuters. Thomson Reuters is the world's leading source of news and information for professional markets. It delivers critical information to leading decision-makers in the legal, media, tax and accounting markets, backed by the world's most trusted news organization. Tax and accounting APIs include:
    • ONESOURCE – a tax technology that helps businesses stay compliant.
    • Checkpoint – an online research suite with source material, tools and news.
    • Onvio – cloud-based software that provides real-time access to documents, invoices, projects and more.
    KYC Providers
    Shufti Pro. ShuftyPro is an AI-based identity verification solution designed to eliminate the risks of financial crime, cyber fraud and identity theft. Its key benefits are a fast and accurate verification process, global coverage, and two-fold technology that combines HI and AI to ensure the highest level of accuracy.
    Alloy. Alloy is a platform for automating identity-related decisions in fintechs, including KYC, AML and fraud prevention. The service makes it easy for financial services companies to onboard and manage more customers securely and quickly by automating the vast majority of decisions, mitigating fraud and costly financial risks, and reducing back-office burden and manual review queues.
    Interactive Brokers. Interactive Brokers offers clients around the world the ability to invest in stocks, options, futures, currencies, bonds and funds through a single integrated account. The company's technology helps its clients optimize their trading speed and efficiency and perform sophisticated portfolio analysis. The platform offers free trading tools, more than 100 order types and comprehensive reporting.
    Apex. Apex offers a robust suite of APIs (with an enhanced developer portal) to facilitate the entire trading and investing lifecycle – from account opening to regulatory support and everything in between. Apex APIs allow executing orders across all major asset classes, including support for partial orders, book-keeping, and equity allocations.
    Communication Services
    Twilio. Twilio connects businesses to their customers. Fintechs can use the Twilio SendGrid Email API to send, receive and manage emails or the Twilio API for WhatsApp. Twilio SendGrid Email API provides fast integration via API or SMTP, real-time data and analytics, and multiple tools to optimize deliverability. Twilio API for WhatsApp provides a developer sandbox for application testing, a managed WhatsApp container infrastructure, and API-powered text and template messaging.
    Plivo. Plivo is ranked № 1 for customer satisfaction in G2's Cloud Communications category. Over 98% of customers rate Plivo with 4.5 or 5 stars. Plivo offers an SMS API platform that allows to send and receive text messages in over 190 countries worldwide; a Voice API platform that allows customers to programmatically integrate voice calling functionality into their apps; and the MMS API platform allows customers to send and receive images and videos in the US and Canada.

    The Most Interesting Fintech Startups That Use APIs

    KissKissBankBank. A France-based crowdfunding platform that uses the MangoPay API to transfer payments. KissKissBankBank has already helped 25,000 high-impact projects get funded and brought together over 2.3 million engaged citizens who believe that funding projects together helps make the world a better place.
    Betterment. A savings and investing app that provides users with tools, inspiration and support they need to become better investors. Betterment uses the Plaid API to aggregate account information. Since its foundation in 2010, the project has united 350 Bettermenters across the country and helped over 700,000 customers turn their everyday investments into their dreams.
    Transferwise. This money transfer service allows customers to send money abroad or get paid in other currencies and spend abroad with their Wise debit card. Transferwise uses Twilio API to communicate with customers. The service facilitates money transfers and helps save a lot of money as the fees are very low and the amount customers pay is transparent at the time of transaction or conversion.

    Which APIs Are Right for Your Fintech Solution?

    When choosing the best APIs for your solution, you should consider several factors, including use cases, customer requirements, and your business strategy. And when it comes to fintechs, meeting government regulations and compliance requirements is also critical to the success of the project. So, find out whether the shortlisted APIs ensure regulatory compliance.
    Overarching features such as performance and ease of use are also important. Currently, the leading style for web services development is REST (Representational State Transfer) APIs. Unlike more rigid API styles such as SOAP (Simple Object Access Protocol), REST APIs provide optimal flexibility and ease of use for building Web services and applications. Such APIs meet the following architectural criteria:
    • They have a unified interface for resources within the system that is available to external API consumers.
    • They are client-server based (the client application and the server application operate without interdependence).
    • They are designed for stateless operations, where the server does not store anything associated with client requests – each request is treated as a new request.
    • They involve RESTful resource caching and enable the use of layered system architecture.

    To Sum Up

    Fintech APIs are reshaping the industry, helping to mainstream the financial app development process without compromising the quality of the end product, leading to an explosion of new apps, services and business models. The challenge is to find the right integration to enrich your app with new features and deliver value to end users.

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