According to The Financial Brand, “more collaboration than ever is taking place between banks and fintech firms, leveraging the benefits that each can bring to the table to create customer-centric solutions.“ Recently, banks have been working with fintechs more to use APIs to provide greater choice and servicing to bank customers. According to the Capgemini Financial Services Analysis 2017, the benefits of implementing bank APIs include: enhanced customer experience, new revenue streams, increased agility, enhanced operational efficiencies and new products and services. By leveraging the APIs of fintechs, banks have been able to effectively increase their product offerings and improve customer relationships without the costly development price tag.
Banks used to be more cautious and apprehensive about partnering with a fintech. However, APIs have presented an appealing connection with fintechs, enabling enhanced servicing by banks to their customers while ensuring compliance and security. By leveraging this technology, banks are able to offer their clients a customized, secure and sophisticated software to manage their businesses.
Through the use of APIs, banks have greater control and oversight of their businesses. More specifically, they control their customers’ experience and their brand. Their customers also have greater flexibility and security in expanding their service offerings because they are able to:
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Manage the user experience
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Streamline and ensure clarity in the user interface
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Communicate in real-time with customers
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Optimize their investment and reduce cost in managing their receivables
Payments processing is expensive and difficult, and compliance rules are routinely updated and evolving. Since this is not typically a bank customers’ core business, offering a third party software through the use of APIs enables banks to better serve their customers and likewise enables bank customers to focus on their core business. APIs enable real-time communication between businesses and their customers, reducing inefficiencies, inaccuracies and cost – e.g., from businesses having to charge their customers with late fees. Essentially, APIs offer banks a way to effectively, successfully and securely partner with fintechs to enhance and expand the solutions and services they offer to their customers.