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Financial Technology

Application Programming Interface (API) Use in Business Banking

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    • FNBO

      Commercial Banking
      Jun 05 2023

Application Programming Interface (API) Use in Business Banking

Although open Application Programming Interface (API) use has been part of the business world for more than 20 years, APIs are now more mainstream in the banking industry, facilitating more efficient money movement and enabling payment channels beyond traditional online banking.

Because technology is expensive to build and maintain, it can be difficult for organizations of all sizes to keep up with the pace of change and remain competitive. An API provides a way for software systems and platforms to work together and extend existing banking capabilities to other bank systems or partner applications. Applications are developed and connected to another organization’s pre-existing software, providing a fast and easy way for companies to adopt new technology.

Key banking APIs facilitate payment processing and the real time transfer of data. Rather than sending batches of data at specific times, an API is always on, allowing information to flow freely at any time. 

Platforms and APIs, What’s the Difference?

The world of APIs starts with a platform. In simple terms, think of a platform as the ground on which software applications are built.

APIs then form the connection layer. They allow third parties to access the platform to build new products and later make it simple for businesses to connect to the applications that live there.

APIs can be exposed in an open or closed environment. Closed APIs can only be accessed by those in the organization in which they are created. Open APIs, on the other hand, are publicly available and allow third parties to build and distribute their applications.

Apple is a well-known platform that uses an open API. Developers can connect to the platform, build an app, and then, with Apple’s approval, make it available for consumer use. Because of Apple’s open API, the company can offer a rich marketplace of applications, all designed to increase users’ enjoyment and simplify everyday tasks.

In a similar way, banks are using APIs to offer products that simplify financial management for their business customers. 

Banks Using APIs and Third-Party Integrations

According to a recent large-scale business survey, over half of respondents are digitally transforming their organizations to improve the customer experience. However, most companies are keenly aware of the need to move the needle on internal processes as well, such as accounts payable, accounts receivables and payments.

In fact, 32% of companies responding to one survey said that biometric identification in payments will top the digital trends for 2023. If that is a little too foreign, then let’s talk about digitizing basic accounts payable and receivable processes.

As businesses seek technology to streamline financial functions and provide faster and more efficient ways of managing their business, FNBO is delivering by developing an API product store. Built on the ease and convenience of open APIs, this product marketplace will allow vetted third-party fintech (financial technology) developers to create meaningful applications, and for our customers and partners to easily adopt the products they need.

Because our goal is to be customer driven in all our product offerings, we’re taking our cues from internal and external customers, learning to understand business priorities and what products are necessary for their success. Our current focus is on creating always-on capabilities for our customers’ money movement, including automation of ACH, Foreign Currency Exchange (FX) and wire payments. 

Products offered through an API-enabled marketplace offer several advantages to businesses. One benefit is the absence of software and hardware development and maintenance costs. Organizations simply choose the applications they want to use and connect.

Another advantage is seamless access to data. APIs have the potential to connect business financial information and banking account data with application functions. This can replace the need for batch file static data transfers and allow for money movement any time and in real time. Not only does this functionality make it easier for businesses to make payments and reconcile accounts, broad access to financial insights also makes it easier to predict business cash flow and make better decisions about the future.

As APIs become integral in banking, a world of new technology will connect accounts and seamlessly manages finances.

The articles in this blog are for informational purposes only and not intended to provide specific advice or recommendations. When making decisions about your financial situation, consult a financial professional for advice. Articles are not regularly updated, and information may become outdated.