Exploring the Future of Banking APIs for Digital Startups

September 3, 2021 Startups

Embedded finance and APIs are here to stay, offering some of the most revolutionary banking and financial services the business world has seen for some time. In fact, with the promise of easier, more transparent, and safer payments, the previously closed world of banking is now opening up like never before. 

However, we are just at the beginning of the journey, and the future holds a wealth of possibilities for this nascent technology. But what is in the pipeline? And how does embedded finance work to allow businesses to provide more intuitive financial services to their customers? 

Here, we explore what the future might look like for APIs and some of the products peeking over the horizon. Read on to learn about what the future of fintech APIs and embedded finance can do for your digital startup. 

Understanding future users and their needs

Embedded finance is based around stacks—banks, customer data, and financial infrastructure are the foundation. The API itself sits in the middle, and the company offering financial services to the customer is layered on top. 

What this means in simple terms is that digital startups can now offer a comprehensive range of financial services to its own customers that previously would have been the preserve of conventional banks. Whether that’s simple card transactions without having to store customer payment details and remain compliant, or financing and insurance options tied to specific products, customers can now do it all at point of sale. 

The future of embedded finance then, lies in understanding and identifying future users and their specific financial needs. For example, a travel agent may now offer vacation insurance as part of any holiday package, seamlessly connecting the customer to the insurer/bank within its own website. 

Looking further ahead, businesses may wish to integrate cryptocurrency payments into their websites, they may want to connect customers directly to lenders willing to finance specific products, they may even wish to link customers to government subsidies or grants that provide discounts on products such as electric cars or solar energy. 

Easy integration and personalization

While today software developers are the primary users of APIs, either to communicate between services, build integrations, or to provide solutions for third-party consumers, this is quickly changing thanks to easy integration and personalization. 

Businesses today don’t need staff with a degree in coding to integrate APIs into their website, and in many cases, they work right “out of the box”. In addition to this, the flexibility of APIs mean that they can easily be personalized and tailored the specific requirements of any business. 

For example, Intergiro’s embedded finance API offers simple plug-and-play functionality through its platform, giving businesses the opportunity to set their own FX rates and take transparent payments through a local payment network. The standout feature here is the ability for businesses in different countries to tailor the API for international currencies and offer customers simple, fast, and trusted payment options directly on their website. 

Modular products and services

With the stack-based nature of APIs, a new world of modular finance is opening up for both customers and businesses. Previously, banks preciously guarded multiple financial products, often at the expense of service quality as they tried to wear all hats – from payment services to car insurance, and everything in between. Customers we’re also often tied to one service provider, meaning 

Embedded finance, however, allows service providers to focus on what they do best, and both businesses and customers can benefit from this. Today, there are numerous APIs offerings that allow customers to connect with best-in-class providers. Examples include PayPal, Mastercard, and Thomson Reuters. 

However, this modular approach to financial services has the ability to grow exponentially. For example, a customer may begin a search for a house online through a real estate website, arranging viewings and other real-world appointments. Then, the platform may be able to once again take over, offering connections to mortgage providers, escrow services, and insurers among many other services. 

Everything can be integrated into the same platform, and everything is tailor-made for the house purchasing process. This is a huge leap from the often-fragmented process that exists today, streamlining all aspects of purchasing property from day one!

We are only just beginning to scratch the surface of what APIs can do for digital startups in the real world, and as the number of developers and grows, so too will the number of solutions available to businesses—with everything from investments, mortgages and credit scoring to cross border payments and cryptocurrencies factored in. 

The future, then, is inexorably moving towards a world of embedded finance that allows the secure sharing of data and increased efficiencies across all financial services. Everyone stands to win, but digital startups who are early adopters can raise their head above the crowd today.