Each advancement reduces the time and monetary investments that financial institutions make. Advanced Program Interfaces, or APIs, are one such advancement. We believe that they are part of an automation revolution.

While the same technology was viable ten years ago, we have seen how Open APIs changed the way Banks are serving their customers. Open Banking, based on the same concept, is the demonstration that Financial Institutions can provide new and innovative services to their customers.

Digital Banking Disruption: Trends in the Financial Industry

Deloitte believes that Open Banking and API Banking have ushered in digital disruption in a good fashion. They note that Australia, the U.K. and the European Union have adopted these advances to improve payment services for customers. Iflexion predicts that 78% of millennials in the US will be using digital banking.

What Is An API?

An API is a set of protocols and tools to build an application. It serves as an independent functionality. The main goal of an API is to create a kind of connector to receive information from another application or share it with an outside program. API’s tools when they come together are called components. You can integrate them with the rest of your applications.

Some enterprise banks are using up to 1000 different applications. The reason why the complexity of sharing data, manage reports and data orchestration is much higher. During the last ten years, we assisted in a growing interest to reduce data silos. This has led to opening the path to a larger use of APIs and integrations.

Modern applications can share data automatically using an Open API standard like Swagger. This is useful for businesses that have too many applications to manage with a decentralized approach. You can restrict the type of information and the senders. Only an API allows this with components and create connectors.

What is an API connector then?

It serves as an information relay and security measure, potentially. Without APIs, you’ll have the information stored in a single container or a database without the ability to securely share data with others. The major risk comes from security breaches, which makes businesses vulnerable to hackers. When you add the interface, APIs streamline integration and security. You can also connect multiple interfaces to add layers of data protection.

Consider if you have integrated your Gmail, LinkedIn, and Office 365. You can share information with all of them despite the different programs. An API allows you to exchange the data accordingly and save time. The communication is rapid.

Internal APIs are made for in-house users and other digital components. This allows you to exchange data securely between sub-applications, coworkers, and departments. Usually, they can be customized for your individual business needs. Software and enterprise companies like Virtus Flow create internal APIs to maximize their platforms’ sharing capabilities for crucial data.

Partner APIs are made for businesses with whom you collaborate. These are called external partners because they are not part of your internal users. Regardless, these APIs are private and have restrictions. The restrictions help reduce the chances of a data breach. You can decide which types of data to share and set the APIs accordingly.

How Intelligent Automation Is Reshaping Financial Institutions

Public APIs are APIs that anyone can access, through a password-locked account. One example is Facebook login, or Google login, for various websites. The API redirects you towards a Facebook or Google window. Financial websites such as PayPal also allow for this form of login. One tradeoff is that there is a lower level of security, but it increases convenience for external users. In addition, companies can integrate these APIs with their platforms easily.

What Are Open APIs?

Open API is a new standard and is also known as restful APIs. It allows users to integrate their applications using various coding languages. These include legacy languages, which programmers and developers have abandoned in favor of newer ones, and modern ones.

Such legacies are hard to integrate because the common APIs weren’t available at the time. Having an API that can handle these languages means that you reduce the barriers for new internal users. This also means that you are less likely to lose data to obsolete software.

Virtus Flow recently introduced a new layer of Swagger Open APIs that allows every customer to quickly integrate its platforms leveraging the power of this new standard without complexity.

What is Open Banking?

Open banking is a revolution that is taking place all over the world but especially in Europe and the UK. It involves sharing customer data — with permission — with third-party applications for improving the banking experience for everyone. These third-party applications are designed for security and to leverage this financial information for convenience purposes creating a new set of financial and digital products.

Many banks don’t have the speed and sometimes the technology – especially if relying on legacy applications – to compete with fast-growing Fintech companies. Open banking makes the transition smoother using customers’ financial data to create new services. It also allows them to pool resources with tech companies through partnerships rather than asking their IT department to develop internal applications.

→ How To Simplify Back-Office Automation with Open API App

Benefits of Open Banking

Every European bank uses open APIs to assist their internal operations and external ones. The European Union used this to create an open banking system for every citizen and resident. While the United States is working at integrating APIs, we are still behind our international equivalents.

Speed is one benefit. A traditional bank transfer can take 2-5 business days, even if you use a website. This can be a problem for banks that want to capture real-time transactions, as well as for the customers that may need the transfer to happen as soon as possible. With Open Banking, you can drastically reduce the time it takes to share data, thanks to the connector that allows it.

Another is offering a wider array of services. A personal financial management platform aggregates different accounts conveniently in one app. This provides new insights for the user and for the Financial Institution. This is now difficult to obtain because you need to log in to different applications and tools that don’t speak with one another.

Streamline Operations With End-to-End Process Automation

Virtus Flow wants to help you improve your banking with automation and digital workflows. The more you can reduce human error, the more time you can save; consequently, convenience and efficiency will increase. That is why we offer Digital Workflows to help with Digital Process Automation. Contact us today to schedule your first demo.

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