Innovating Financial Services with Banking APIs

Traditionally, financial services and banking have been among the most conservative industries. Then fintech happened. Companies composed of just a few talented and motivated developers started taking slices of the financial pie and “disruption” became a media buzzword applied to what used to be cautious industries. But, while quite a few banks have joined in the innovation, a key issue remains unchanged — banks do not provide APIs.

What is a banking API?

A banking API is a tool that lets applications access financial data of users with their consent. The process works like using Facebook or LinkedIn to log in to a third-party app, but in the realm of financial services. Instead of filling out a bulky registration form on a website, users just click a button and the browser grabs data from the current Facebook or LinkedIn session. With banking APIs the process is, of course, different, due to the security measures. But not so much.

An application that wants to access banking data will ask users to authenticate to their bank using their login credentials. This is still the case even if they are already logged in to Internet banking in another tab. Once authenticated, an application gets access to that user’s registration, account and transactional data.

3 Main Benefits of Banking API 1

1. Know-Your-Customer

Most companies that offer financial services are required to perform Know-Your-Customer procedures. Typically, this is a time-consuming, labor-intensive process. When done offline, it might require customers to visit a bank branch, wait in line and, potentially, not have all the required documents. To perform KYC online, users have to supply scanned copies of documents, which sometimes may include even a utility bill.

Whether, as a customer, you have to authenticate yourself online or offline, it is still an unpleasant process that delays the use of an actual product or a service. But, if you really think of it, why do you need to get identified every time you register at a new company? Wouldn’t it be better if these companies could somehow communicate and perform KYC based on the data obtained from the source of your registration? This is where banking APIs come in handy.

In the last two years, for example, German online microlender Kreditech doubled its conversion rate using such technology. Instead of requesting a client to upload the documents and proofs of residence, Kreditech was able to actually verify the identity of a client with just a few clicks.

2. Understand Your Customer

Identifying your customers does not really mean understanding them. Google asks you for hardly any information and, sometimes, only requests a phone verification. Nevertheless, this company tracks your searches, behavior, interests and so on. Based on the data obtained through the usage of its services, Google can display ads that are more likely to be compelling to the user.

The same can happen in the financial industry. If a company can access a customer’s’ transactional data and analyze their spending habits, it can serve truly tailor-made offers that are more likely to be useful for and, hence, adopted more often by customers.

3. Provide More Convenience

Do you remember when upgrading your phone took forever? Unless you had all your contacts backed up to a SIM card, you’d need to spend hours copying contacts, re-sending important messages and so on. Today the process is roughly the same when it comes to finances.

Your bank has all of the predefined payments, address book and other features that you have spent years setting up. With a banking API, a user can import all of his settings with a single authentication. When Alior bank launched AliorSync, for example, it managed to attract new clients by ensuring that all of their current banking settings would not be lost when importing data via Kontomatik banking API.

Why Kontomatik banking API?

There are a few advantages that make Kontomatik stand out from the rest. First of all, Kontomatik technology does not evaluate tons of unnecessary data. This way it is possible to access banking data in just 12 seconds. Other banking APIs may take as much as 3 minutes to extract the data. Next to this, Kontomatik is currently available in 8 countries: UK, Spain, Poland, Czech Republic, Slovakia, Russian, Mexico and Brazil. Such a wide coverage is certainly needed when it comes to assuring a quick and smooth geographic expansion. Rock solid reliability is another reason to choose Kontomatik. The technology exists since 2009 and has been integrated in numerous banks, online lenders and personal finance management apps.

The Verdict Banking

APIs will be the fuel of financial innovation over the next few years. This technology will power up new services that will transform the way we treat our financials as well as will assist in developing banking systems and enabling merchants to gain access to the customers and data they need more easily. It is no longer to optional for financial services to go with or without API, however the choice of an API vendor is still here. Choose a global leader in banking API technology. Choose Kontomatik.

Company: Kontomatik
Address: Sp. z o.o.
Prosta 32, 00-838
Warsaw, Poland
Telephone: 48 22 468 2007