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APIs for the financial market: what are they and why are they important?



 Digital transformation is succeeding in revolutionizing various sectors of the economy, including finance.

To keep up with this revolution and keep businesses competitive, companies need to keep up to date on the subject and, of course, invest in key technologies.

APIs emerged with the proposal to improve customer services. But, because it is a complex term, many are confused about what APIs are and how important they are to the financial market.

To clarify once and for all doubts related to this subject, we decided to write today's post explaining what APIs for the financial market are and why they are important. Also how they work and what their main benefits are.

We hope you like it. Good reading! 

 

What are APIs for the financial market? 

The term API, which in English means “application programming interface ”, is a set of programming patterns that allow the development of applications associated with digital services. 

APIs for the financial market can be used to link online stores or applications to bank payment systems, for example. 

 

What is the importance of APIs for the financial market 

One of the most interesting things about APIs is that fintechs, banks or other institutions can use them to increase the quality of products and the security of the services provided to the customer. 

Financial operations that until then had to be face-to-face, such as transfers and loan simulations, can now be carried out in a few clicks thanks to technology. 

APIs are important for the financial market because they simplify bureaucratic processes. But not only that because they help people to have more control and independence over their finances.

 

How APIs work

APIs work by communicating multiple code. These codes define specific behaviors of a given object to an already existing interface. 

In the case of applications or an e-commerce store, for example, APIs can link functionality to other external applications such as payment systems. 

You know when you buy a product on a website and a page opens with a series of options with boleto, credit card, debit card, PIX and transfer?

So, the choice and payment operation is only possible because the APIs release these functionalities through programming.

 

Benefits of APIs for the financial market

Because APIs work through a variety of code, they bring a number of benefits. The main ones are: information security, agility and compatibility in the integration between systems and applications, possibility of innovation in products and services and reduction of manual work. 

“But what, exactly, are the advantages that technology can bring to the financial market?” , you might be thinking.  

That's what we'll see next.

1- Greater variety of products and services

Until recently, magnetic stripe cards were considered revolutionary products. However, with the reconciliation of APIs, today the customer no longer needs to rely on a physical card to carry out financial transactions. You can just use a virtual card or access internet banking to make payments and transfers instantly.

With the widest variety of digital products and services, the customer is able to have more autonomy to select the most advantageous option for their pocket and that meets their needs. While financial institutions can expand their catalog and increase competitiveness.

 

2- Possibility of using mobile devices to make payments

Internet banking, a digital bank that allows you to perform a series of financial services through a computer, smartphone or tablet, depends on APIs to work. 

Therefore, people no longer need to go to a physical bank to make inquiries, make payments, schedule transfers, among other services. They can use their own mobile devices to access the account and carry out all financial operations. 

 

3- Companies can develop their own services and products

With APIs, companies from different segments have the possibility to develop their own services and products. This means that they no longer need to be dependent on third-party organizations, nor incur extra costs and fees.

Of course, in order to offer good products and services to the customer, it is important that companies use applications that enable this payment ecosystem. Also that they record and process all data securely . 

 

4- Increased competitiveness

However, with the consolidation of APIs, fintechs emerged, companies that aim to reduce bureaucracy in financial services. And these organizations are attracting more and more people as they offer simple and effective solutions at a low cost. 

Certainly, APIs are revolutionary. And the more they are used, the greater the possibilities offered by them. If your company doesn't want to fall behind or miss the opportunity to stand out, it can't ignore this technology. You need to invest as soon as possible in innovation and transform your business.

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