What is API Banking Services and how it works?


Open Banking, with the help of APIs, is considered to be one of the biggest advancements in the banking industry. It has provided businesses and consumers easy access to custom banking services while also ensuring complete safety and enhanced efficiency. Check out this post to know what banking APIs are and how do they work.

The modern banking industry is often the first to experiment and benefit from newer technologies. Meeting the changing needs of the consumers and battling competition are two of the biggest reasons why top banks all over the world, especially in India, now devour the latest technologies faster than ever.

Open Banking is one such recent innovation. It involves the use of APIs that have access to the core system of a bank. These APIs can then be used by 3rd parties within their organisation/platform or be offered to the consumers for a more personalised banking experience. Let us have a look at what banking APIs are and how they work.

What are API Banking Services?

API or Application Programming Interface enables a 3rd party application to use a particular interface through which it can access a common set of tools or services. In banking, this means a bank can offer 3rd party access to its custom services through dedicated APIs. Multiple 3rd parties can then use banking services or also offer the same to its customers.

Some of the top banks in India now also allow developer organisations to use their API platform and build custom APIs. From building an API from scratch, testing it, to going live, banks offer all the tools and features to the developers to build powerful and efficient APIs.

API Banking in India

Now that you know what Application Programming Interface is and how bank APIs work, let us have a look at the state of API banking in India. It was in Aug 2016 that Competition and Markets Authority (CMA) in the UK asked several top banks such as Barclays, Santander, Lloyds, and more, to provide access to their core banking data to licensed 3rd parties.

In the same year, the RBI Governor launched Unified Payments Interface (UPI) in India. Developed by National Payments Corporation of India (NPCI), the payment system has played an integral role in the rise of banking APIs in the country. A few banks then started launching API services which considerably disrupted the traditional retail banking scene in the country.

Fast forward to 2019, and there are now many banks that offer such services, and several start-ups are now solely focused on banking APIs to further boost Open Banking.

What are the different types of bank APIs?

A few top banks in India now offer a host of banking API banking services spread across categories such as Accounts and Deposits, Payment Gateways, Loans and Cards, Trade Service and Business Banking. There are innumerable ways in which these APIs can be used by 3rd parties.

For instance, a FinTech platform that offers retail loans can make use of the API to check the CIBIL score of a customer or verify their PAN details. Similarly, a business can integrate its Enterprise Resource Planning (ERP) with API banking for managing their cash receivables and payables directly through their ERP.

Banking APIs: Fast, Secure and Efficient

The API services and the access they offer to the core banking data, in a way, helps in eliminating barriers between businesses as all of them have access to the same data. Ultimately, this helps in the overall growth of the financial industry, along with improving the quality of services available.

With many different Application Program Interface types being launched by banks, API banking services are only expected to get more popular in the future. If you run a business, get in touch with a reputed bank offering such services to know more about how the APIs can benefit you.


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