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How Fintech APIs are Transforming Banking

How Fintech APIs are Transforming Banking
 

According to Deloitte, more than 22% of banks have already deployed their own API platforms, while another 39% are working on deployments right now, with more expected to enter the sector in 2021.

This makes sense, because so-called “open banking” is quickly becoming the future of financial services.

Open banking is the practice of a bank sharing customer data with third parties via APIs. The idea is to give customers control over their data so that they can direct their bank to share it with others they trust, in order to improve their services. As Deloitte explains: “While it was designed to give customers more choice, open banking may end up making customers better understand and appreciate the value of one of their key assets: their data.”

Not surprisingly, this has led to an explosion in third-party APIs to serve these needs, bringing new services to the sector that traditional banks can’t yet offer themselves. They are, after all, only giving people what they want in today’s information age.

Individuals and business customers alike are demanding ubiquitous, 24/7 access to real-time financial data wherever they need it. That’s placing a massive premium on APIs that can seamlessly integrate and securely deliver transactional information across devices. Here are a few examples.

Visa wears Plaid

Plaid made it clear just how high the stakes are for financial service API providers earlier this year when Visa acquired it as part of a $5.3 billion transaction. The company was a $310 million startup just a few years ago.

Plaid got its start developing financial service APIs by helping customers more easily share their banking and other financial information. But in 2018, Plaid expanded its financial API offerings by acquiring another startup, Quovo. The idea was to build out a more complete platform for financial service providers.

It took Plaid beyond primarily being used to interact with checking and savings account information and expanded its offerings to a wider class of financial assets. For Visa, the Plaid acquisition was an easy way to play catch-up with the quickly evolving financial API landscape while adding a new layer of functionality to its own services.

Dwolla is opening up payments

By creating a structure for sending, collecting and facilitating payments between users, Dwolla’s programmable payments platform is an API that allows payments partners to incorporate the full power of the bank transfer system into their own native platforms. This is all designed to simplify the notoriously-complex processes around using ACH to process payments, instead of just credit card platforms like Visa and Mastercard.

As new CEO, Brady Harris, explained in April: “The exciting thing about ACH rails is that there’s some emerging technology where you can have same day — and even instantaneous — fund transfers. It’s also a fraction of the cost of interchange of what Visa and Mastercard charge on the same transactions. So, you have a couple things intersecting. You have really fast deposit times. Using API, you have a highly customized programmable payment that can be integrated into software, apps, platforms and dashboards. And it’s a fraction of the cost.”

Trulioo is fixing online identity verification

Available in more than 80 countries around the world, Trulioo’s API allows just about any business to tap instant online identity, document and business verification coverage for over five billion people. Its service helps financial institutions adhere to anti-money laundering and “know your client” regulations no matter where they do business, helping companies more seamlessly expand into growing international markets without fear.

Its GlobalGateway API normalizes hundreds of identity data fields from different countries to just 30 fields, using built-in intelligence and mapping. With fewer fields to configure, businesses can scale up more quickly and smoothly.

Stepping beyond basic transaction data with Greenback

At Greenback we’re blowing up the transaction data model used by traditional banks and financial institutions to deliver richer, more detailed data to customers and institutions via our API.

Today’s financial datasets are pretty basic. You generally get a date, an amount and a few words to describe the transaction, often coded so it’s all but impossible for regular customers to decipher. This kind of summary level data lacks itemized detail around the products or services that are being purchased or the income and deposits that are received.

But transaction data can do so much more.

Greenback’s high-def data expands on this, gathering information from multiple sources to provide itemized, detailed transaction data from millions of retailers, service providers, payment platforms, e-commerce providers, POS systems and seller marketplaces. This can include readable product descriptions like you would see on a retailer’s website, links directly to those products, retailer logos and other details, sales and VAT tax information, original receipt images for in-store returns, VAT receipts, shipping costs, quantities, price per item, product SKUs, subtotals, discounts, the card used, retailer-specific attributes (e.g. you Uber driver’s name, Home Depot store number, etc) and more.

With this kind of high-def data, a wide range of automations and other services become possible. Businesses can integrate transactional data directly with their accounting platform to streamline recordkeeping. Receipt data can be retrieved automatically from employee emails, as well as directly from many of the world’s top retailers, to automate expense tracking and management. Merchants can also automate sales transaction data from platforms including Amazon, Etsy, Ebay and others, delivering itemized fees, sales taxes, refunds and other details.

The short story is that finance APIs like these are transforming the way the world transacts business, expanding on the capabilities of traditional financial service in the process.

Learn more about Greenback’s API at www.greenback.com/platform

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