{"id":626,"date":"2020-06-09T13:42:17","date_gmt":"2020-06-09T08:12:17","guid":{"rendered":"https:\/\/open.money\/blog\/?p=626"},"modified":"2023-07-05T15:23:11","modified_gmt":"2023-07-05T09:53:11","slug":"build-the-best-fintech-products-using-api-banking","status":"publish","type":"post","link":"https:\/\/open.money\/blog\/build-the-best-fintech-products-using-api-banking\/","title":{"rendered":"API Banking: The fast track to building fintech products"},"content":{"rendered":"Few things have shaken up the banking industry, the way API Banking has. According to the recent World Retail Banking report, close to<\/span> 79% of businesses leverage API Banking <\/span><\/a>to offer an enhanced customer experience.\u00a0<\/span>\r\n\r\nIn fact, most of the tech giants like Uber, Amazon, Airbnb, etc., have weaved APIs into their system, to smoothen and simplify customer transactions, refunds, and salary payouts<\/a> to employees. <\/span>So much so that <\/span>API Banking<\/a> has killed the wait time that goes into building products from scratch. Now it is just a matter of plugging in and getting started right away.<\/span>\r\n\r\nLet\u2019s dive in a little deeper now.<\/span>\r\n

How does API Banking work?<\/strong><\/span><\/h2>\r\nAPI Banking is fairly simple and can be explained in a three-step process. Let\u2019s pick an example.<\/span>\r\n\r\nSay you recently started out <\/span>Piggy, <\/b>an online food ordering and delivery platform. And you are looking to create savings accounts for your employees. Now you want this done quick and hassle-free, so you approach an API Banking<\/a> provider like <\/span>Open<\/a>. And having already integrated with the bank\u2019s APIs, <\/span>Open gets the job done in no time.\u00a0\u00a0<\/span>\r\n\r\nHere\u2019s a detailed run-through of what goes around:<\/span>\r\n\r\nStep 1:<\/b> Open integrates with the bank’s APIs and initiates a request to create savings accounts for <\/span>Piggy’s employees.<\/span><\/span>\r\n\r\nStep 2:<\/b> Bank goes ahead and creates these accounts and sends the information back to <\/span>Open<\/span>\r\n\r\nStep 3: <\/b>Open then passes on this account information back to <\/span>Piggy. <\/b>That way you can use it to transfer money to your employees.<\/span><\/span>\r\n\r\n\"How\r\n

Why not link directly with the bank?<\/strong><\/span><\/h2>\r\nNow there is one other obvious way to go about this – you (<\/span>Piggy in this case<\/span>) could go integrate a bank directly. But if you ask most businesses that have gone down that path, they\u2019d tell you that it\u2019s quite a tough task at hand. Here are a couple of reasons:<\/span>\r\n

(1) Complex to integrate<\/b><\/span><\/h3>\r\nBank APIs are written with Simple Object Access Protocol (SOAP). It will eventually get complex when you start building programs to integrate with banks with SOAP technology.<\/span>\r\n

(2) Strenuous error management\u00a0<\/b><\/span><\/h3>\r\nThere could be instances where banks throw a technical error, and businesses like you wouldn\u2019t be able to make anything out of it. API Banking providers will rephrase these technical error messages to simpler ones that are easier to understand.<\/span>\r\n

(3) No standard API documentation<\/b><\/span><\/h3>\r\nBanks lack proper API documentation. Most of them have it in a very <\/span>hard-to-consume<\/span> format which makes it difficult for businesses. API Banking providers, on the other hand, test these and then document it in a better way on developer portals. This way you can breeze your way through the API documentation.\u00a0<\/span>\r\n

(4) Tough time tracking payments<\/b><\/span><\/h3>\r\nImagine getting bombarded with bank statements of different formats from different accounts. Reconciling them automatically will make it easier for you to take action. However, this isn’t the case with the banks. At the end of the day, you will still have to sit through multiple reports to reconcile payments manually, which can be quite a tedious task.<\/span>\r\n

(5) <\/b>Difficult to manage multiple accounts<\/b><\/span><\/h3>\r\nMost businesses use multiple bank accounts to go about their daily finances. However, it is difficult to directly integrate the APIs of these banks as most of them vary in structure. Therefore, it\u2019s best to leave <\/span>such hassles to API Banking providers like Open. That way you get more time to focus on what you do best – running your business.\u00a0<\/span>\r\n

Unlock new chances with API Banking<\/strong><\/span><\/h2>\r\nApart from the ones mentioned earlier, API Banking <\/span>also provides a range of services like:<\/span>\r\n

(1) Issue cards<\/b><\/span><\/h3>\r\nAPI Banking providers can help you issue and service white-labelled cards for business and individual accounts. You can even issue customizable virtual cards<\/a> with dynamic spending limits.<\/span>\r\n

(2) Customizable Loans<\/b><\/span><\/h3>\r\nYou can easily service and issue loans for your customers. These loans are highly customizable with <\/span>a capped interest.<\/span>\r\n

(3) Build your payments flow<\/b><\/span><\/h3>\r\nBuild and tweak your payments flow and customize it using APIs to enable payments<\/a> or to connect and verify the user’s bank account.\u00a0<\/span>\r\n

Build best-in-class fintech products<\/strong><\/span><\/h2>\r\nWith the emergence of API Banking providers, businesses can now build & launch best-in-class financial products & offer enhanced user experience with great ease. I<\/span>f you’re looking for an API Banking provider to help you build your own neobank or a fintech product or to automate banking in your existing product, <\/span>head over to Open<\/a><\/span> and give our platform a try.<\/span>\r\n\r\n \r\n\r\nRelated Articles –\r\n\r\nHow to collect & track payments like a pro with Virtual Account APIs<\/a>\r\n\r\nHow to score additional capital sources for your business<\/a>\r\n\r\nBulk Payments, now made smarter with Open\u2019s Payout APIs<\/a>\r\n\r\nPrepaid expense cards \u2013 A guide on managing your offline business expenses<\/a>\r\n\r\nDecoding neobanking: Why neobanks are winning over businesses<\/a>\r\n\r\nWhy an online bank account is essential for SMEs & Startups<\/a>\r\n\r\n \r\n\r\n\r\n\r\n