The financial industry is one of the most data-driven industries in the world. The power of APIs in this industry is crucial to its success. They allow for seamless information sharing and access across all levels of the organisation, from the front desk to the CEO. They also enable companies to become more agile and responsive to both internal and external changes.
Financial institutions are facing more and more pressure to innovate and stay ahead of the curve. From industry regulations, to market competition, they’re finding themselves in a tough position. With the rise of technology and digitization, there is a need for financial institutions to not only up their game, but also take it to the next level.
Read on for a breakdown of the basics of APIs and how they are shaping the future of finance.
An API can be defined as a set of pieces of code as well as definitions that dictate how applications communicate and share information with each other. They run our everyday lives and we use them every now and then without even noticing.
For instance, there are applications that allow one to see all their bank accounts from a centralised location even though they use different banks. This is made possible by the use of APIs that communicate with the specific banks’ APIs and collect the information that one needs.
Another example would be when making a purchase of stocks online. You have registered with a stock market application and want to view all the available stocks. A stock market data API client communicates with different stock servers and provides all the relevant information to you via the stock market application.
This shows how important APIs are in everything we do today. When it comes to the financial industry, APIs are also playing a vital role and dictating how financial firms operate.
APIs are very crucial in the operations of businesses in the financial industry. When these businesses were adopting the use of APIs, they did so to create fair competition between established firms and new entrants and to ensure that account holders had control of their own data. This led to the increased adoption of APIs in the industry, something that has given birth to more products such as open banking.
Since then, we are seeing the growing adoption of APIs in this industry. Businesses in the financial sector have realised that they can come up with tailored innovative solutions that meet the specific requirements of their customers.
Today, these businesses have to share data between different platforms in real-time for them to meet their obligations. They cannot do this without the use of APIs. This shows how powerful APIs are in the financial industry.
In addition, APIs provide many benefits to players in the financial industry. For instance, due to changing customer demands, businesses in this industry are forced to come up with new solutions every now and then to address the change in customer demands. This entails adding new features to their applications, modifying the existing features, or even building new applications altogether.
Instead of having to build these features or the applications from scratch, they can look for an API with the same functionality that they want. They then implement this API, modifying it to match their requirements. This shortens the time it takes to release new applications or add new features to the existing applications.
In conclusion, APIs have made it possible for players in the financial industry to come up with flexible applications. In some instances, businesses need to address similar but different customer requirements. This means that they need applications that are flexible enough to handle such demands.
It is through APIs that they are able to address such issues. When it comes to security, APIs are able to ensure that businesses win the digital security game and seal any loopholes that might lead to data being exposed to unauthorised personnel. However, this works when proper API security measures are implemented.
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.