Much of today’s digital financial services world revolves around fintech companies and their use of application programming interfaces (APIs), which enable open banking platforms to incorporate more innovation and accountholders to personalize experiences. An overwhelming percentage of APIs now utilize REST (Representational State Transfer) architecture, which provides scalability and flexibility if connected properly.
Disruptive technology sometimes pushes fintech vendors so far ahead of the banking tech development curve that it overwhelms financial institutions before they are prepared to adopt new tech. That is a major reason why APIs have become so prevalent in financial services.
The emergence of API in banking and fintech resulted in significant changes vis-à-vis how financial operations function. APIs have become especially important to financial institutions and fintech firms.
APIs deliver a better way to share information, incorporate multiple systems, and personalize services, making digital financial services faster and effective.
API's Relationship with Fintech and Banking
The usage of APIs increased for fintech with the upsurge of open banking, whereby financial institutions allow third-party developers to access data stored by financial institutions to deliver enhanced services and functionality.
Financial institutions today have customers’ approval to give third-party providers access to personal financial information, allowing for the development of apps and programs that make consumers’ financial lives less wieldy and more efficient. By establishing a standard set of rules for swapping info, APIs make it easier for two-way interaction with banking customers on multiple channels. APIs also offer uniformity to users who want to query their financial institution’s data.
For fintech and financial institutions, APIs simplifies the communication between a software program and the bank’s or credit union’s server. In addition, the use of APIs also allows financial institutions to offer their customers more services, such as the ability to integrate banking accounts with accounting software or getting one-stop access to their banking and investment information.
Some banking areas benefitting from the availability of APIs include payment processing, peer-to-peer programs, investment management, compliance and regulation. A number of third-party services utilize APIs to enable payment acceptance and in app transactions. Some other examples of fintech APIs include supplying credit history for loan applications, a real-time assessment of spending habits and payment bank card use, authorization and enablement of payments, access to checking account information, or the conduit to make an online purchase.
The number of fintech APIs has grown and continues to grow, especially as new fintech startups launch and as customer demand increases for easy accessibility to financial data.
Providing APIs and Fintech with REST
Some banking industry experts see core processing, loan origination, account opening and other systems, as well as upgrading solutions, going from Simple Object Access Protocol (SOAP) to REST. SOAP was the longtime standard method for web service interfaces, but REST has dominated in recent years representing more than 80% of public APIs, which are openly available, currently in circulation. (Public APIs enable popular apps such as Twitter, Facebook, and Google Maps.)
REST, not a protocol or a standard, uses a set of architectural constraints and relies on the HTTP protocol and JSON data format to send and receive messages. Developers consider REST APIs (aka RESTful API) as nimbler, less bandwidth intensive, and built to manage multiple data formats. Plus, it is easier to use than SOAP, which uses specific requirements like XML messaging, fixed security and transaction compliance that make it slower and bulkier.
It is typically simpler for developers to get REST up and running. Major websites such as Google, Twitter, and YouTube all use REST APIs for users to send and receive messages.
Many observers see RESTful APIs as a substitution for SOAP, owing to REST’s cheaper operating cost and improved ease of use and scalability, especially for web and mobile uses. Nevertheless, some enterprises continue to integrate SOAP APIs for certain use cases. So, it is important to align with integration companies that can identify the different needs.
RESTful APIs allow financial institutions to simply integrate their prevailing legacy technology as well as to API gateways, identity and security management solutions such as NXTsoft’s OmniConnect Platform.
NXTsoft Provides RESTful Fintech Solutions
Bundled API solutions, complete with RESTFUL APIs, serve as easy on and off ramps to superhighways of financial information. They also deliver to financial institutions and fintechs a faster time-to-market for open banking solutions.
NXTsoft’s OmniConnect Platform provides secure open APIs for the digital infrastructure needed to build and scale any fintech application in banking, savings, wealth, financial wellness, and insurance. The business functionality offered by NXTsoft in tandem with the enterprise capabilities allow financial institutions to accelerate their API banking transformation from almost a year to a few months.
The OmniConnect Platform provides a ready to go API Framework, letting financial institutions engage with fintech innovators, shape banking-as-a-service proficiencies and collect a fintech products and services, especially in the digital environment.
The platform includes the base functionality to authenticate, onboard clients and accounts, and store and process data, which all other APIs in the OmniPlatform can utilize. OmniConnect APIs use REST principles as a foundation, along with resource-oriented URLs and HTTP response codes. All API responses return in JSON formats.
NXTsoft’s OmniConnect Platform is a premier open banking marketplace for all API needs. OmniConnect utilizes cutting-edge cloud technology to connect fintech solutions to banks and credit unions, ensuring that its clients have the most secure and reliable integration environment in the industry. It connects everything from digital banking to item processing and financial systems. OmniConnect delivers the access needed to financial institutions, removing integration roadblocks and providing a seamless connection between a solution and a financial institution’s core processing systems.
NXTsoft also provides a talented team who has been a part of the fintech and security industries for over 25 years. NXTsoft’s solutions help fintechs and financial institutions, connect and optimize their data to maximize revenue opportunities, enhance profitability, and mitigate cybersecurity risk. Many financial institutions, enterprise and government entities struggle to manage data loads, networks and data security. NXTsoft provides solutions to address those needs in the key areas of data connectivity, data security and data optimization.