When a conversation comes up about the benefits of OpenAPI, it’s usually API developers who are the first to talk. Seasoned API developers, especially those who build products in the REST API architectural style, can go on and on about OpenAPI technology. Using the OpenAPI Specification (OAS) description format and subscribing to the OpenAPI open-source ecosystem are often extremely rewarding. The OpenAPI approach encourages design-first thinking and a highly efficient, responsive way of planning the API’s behaviors, endpoints, and parameters. In addition, the mindshare behind this open-sourced technology comprises some of the most decorated names in tech.
But for this article, let’s go beyond talking shop about API tools and take a closer look at how OpenAPI affects its beneficiaries. Among the foremost beneficiaries of advanced API technologies like OAS are companies in the financial sector, like banks. APIs designed through OpenAPI methods have changed up banking and finance operations in ways that are very noticeable. Below are five key insights on the imprint OpenAPI has left on the financial sector and what this means to financial corporations and their clients.
It Spurs the Growth of Open Banking
The term “open banking” was coined for a new trend in the finance sector that’s heightened in popularity over the past decade. In an open banking setup, banks allow open access to third party providers for consumer banking transactions and the like. Financial data for open banking practices is shared safely and securely between banks and their third-party providers, to the benefit of customers.
Much of the infrastructure that allows for open banking transactions can be attributed to APIs. APIs, especially web services designed using OAS, are responsible for the smooth, easy, and fast experiences that characterize successful open banking. With OpenAPI technology, API developers have a great framework for designing open banking services for their client banks. That, in turn, bolsters the bank’s reputation and the trust it needs from its own clients.
It Allows Financial Institutions to Deliver All-Inclusive Customer Experiences
In previous decades, financial institutions would attract customers because of their products. For example, banks would be known because of their range of deposit products, while loan agencies would distinguish themselves with their loan programs. But in today’s economy, financial institutions must also set themselves apart by their services. The magic formula for appealing to customers involves not only products, but technologically advanced services. Together, these comprise the all-inclusive financing experiences that customers look for.
APIs developed with OpenAPI technology make real-time, 24/7, and all-in-one experiences possible for these corporations’ clients. For example, a loan agency can use an API designed with OAS to deliver bespoke, personalized loan management options for borrowers. Financial corporations need only ask after the level of functionality allowed by the API, and API developers will deploy the appropriate solution for them.
It Helps Financial Institutions Stay Competitive in an Increasingly Tech-Driven Industry
The race to become successful in today’s finance industry is a tight one. Competitors are always scaling up and finding new ways to stay relevant to customers. There’s also the question of which type of financial institution customers will trust with their money. If traditional financial institutions like banks and loan companies don’t make an effort to innovate, customers may turn to fintech or peer-to-peer lending instead.
Financial institutions should indeed envision their success as like their performance in a race. One way that athletes can secure a better position is through the usage of performance-enhancing equipment, like running shoes. OpenAPI technology can serve the same purpose as those running shoes—it can be used to pull ahead of the competition.
It Can Keep Financial Institutions in Better Standing with Regulators
Another important aspect that OpenAPI technology can contribute to is compliance. Like in the case of the European Commission’s Revised Payment Services Directive (PSD2), regulators are advocating broader innovation from financial institutions for data and architecture.
It’s definitely in the interest of financial institutions to digitize and scale up using APIs. APIs developed through the OpenAPI framework can satisfy this demand from regulators and fulfill regulators’ directives for high-quality but affordable financial services.
It Can Ready Financial Institutions for the Coming Age
Lastly, accommodating OpenAPI technology in regular operations may be just the push a financial company needs toward greater innovation. Given today’s consumer landscape, it may not be enough for banks and other financial institutions to rely on their legacy systems. But even if execs know that for sure, they may not know where to start future-proofing the company.
Adopting OpenAPI technology is definitely a good place to start. This could start a great precedent for corporations to digitize more of their transactions and ready themselves to deliver financial services in the new era.
What financial institutions must know about acquiring OpenAPI technology is that they’ll gain more than a well-built technical interface. They’ll have a product that they can leverage to actively increase their revenues. These services can attract a new breed of customers and appeal to their modern-day financial sensibilities—where the values are speed, flexibility, and technological advancement.
If you’re involved in the financial sector and are looking for a breakthrough for your company, start a new conversation with an API development team. You can even brainstorm together about marrying traditional business acumen for finance with the power of API technology.