APIS conquer the financial sector
Financial APIs are transforming the banking ecosystem. Their implementation improves the productivity and efficiency of the new financial services, enriches the customers' experience and helps generate dynamic ecosystems.
Fintech companies have burst onto the financial markets with a bang. Over 24 billion dollars have been invested in this type of companies since 2010. But the great boom in fintech came in 2015, with 11 billion dollars invested in the second half of last year.
The success of these companies has encouraged the transformation of the world's leading banks in a bid to displace them. The only option open to financial institutions to compete with the fintechs is to ally themselves with technology.
The more innovative banks have embraced open APIs to offer better services for their customers, while saving costs and competing or partnering with fintech companies. This is the shift towards an open banking model which underpins the current digital transformation of the sector.
APIs enable financial institutions to collaborate with each other in transmitting personal data with the aim of improving their customers' experience. BBVA is one of the first banks to open its APIs to third parties in Spain.
For some time the sector has been somewhat reluctant to open its APIs, which has rather hampered the evolution of the financial market in Europe. However, the benefits of APIs have won round the financial ecosystem, and an increasing number are implementing them to improve their productivity.
In the midst of this revolution, the Open Banking Working Group has been set up in order to outline a roadmap for the use of financial APIs. It indicates how the data should be generated and shared in the financial ecosystem.
This technology allows banks to generate valuable and dynamic systems in the long term. The uses that third-party apps can make of this type of APIs are very varied –everything from processing payments to assessing risk, among others.
Banks can thus use their customers' data to bring them the new services offered by these apps.