According to Avis Charles, C.E.O of Fuspay, financial data APIs are fundamentally changing the financial industry and enabling entirely safe data sharing between several platforms, including banks and fintechs.
“The digital transformation of Nigerian financial service providers has advanced significantly in recent years. While making sure they have the risk management, cybersecurity, and governance policies in place so they can effectively execute on their innovation objectives, they have substantially invested in new technologies that enable them serve their consumers better” He says.
A number of factors are coming together in the midst of all that development to accelerate the drive for innovation. As more technology companies of all kinds try to establish themselves in the financial services sector, competition is on the rise. Customers increasingly anticipate a comparable level of ease from their banks, having grown to appreciate the added convenience of digital services in many areas of their lives. Additionally, customers are now seeking greater control over their own data due to growing concerns about privacy breaches.
As the world continues to evolve and payments become increasingly digital and mobile, consumer yearns for the flexibility, convenience, and simplicity that they have come to see as usual, for their banking services. While many fintech startups continue to innovate, it is clear that without a shared API standard, the barrier to innovation will persist, especially in underdeveloped nations like Nigeria, preventing the growth of digital payments and, consequently, financial inclusion.
He noted that the emergence of the digital revolution in recent decades has had a profound impact on every industry, including banking and finance, and has rocked the world. The tools that are assisting banks and other financial institutions in successfully undergoing digital transformation and enabling them to seize market opportunities and thrive are known as APIs, or application programming interfaces.
By no means are APIs a novel innovation in technology. They have been used for decades to enable communication and information sharing among various software systems, and they predate the internet itself.
In our daily lives, APIs are a common occurrence. In order for Google Maps to be embedded on a restaurant’s website and help you find it, an API is used. Many well-known apps, including Uber and e-commerce sites like Jumia and Konga, employ this type of communication through APIs, and users frequently do so without even recognizing how important it is to the process.
Now, finance is starting to become more “API-driven,” with smaller fintechs and more traditional financial institutions (FIs) collaborating to improve their offering. In my work as a CEO for a company that provides API-driven technology, I see firsthand how this move benefits not only these individual businesses but the industry as a whole.
This new API-based financial ecosystem is opening doors to a whole new range of financial products, providing consumers more personalized services at a lower cost. For organizations, it means better information when assessing the lending risk of a retail client, having a 360-degree view on a business, getting deeper insights before investing, and much more.
Nigeria banks are beginning to adopt an API enabled approach, banks can serve their customers quickly and efficiently and provide them a seamless experience. APIs enable customers to conduct banking transactions through mobile banking, online banking and wallets on their devices within seconds and securely from any place. So the customers need not visit the banks physically for conducting the transactions, thus saving their valuable time.
Additionally, he pointed out that APIs are enabling banks to diversify their product offerings by enabling them to offer complementary goods like insurance or goods that they develop jointly with partners and financial technology companies. Only the adaptability of APIs, which interact with numerous systems and enable communication between other businesses, makes it feasible to expand one’s portfolio in this way.
With almost 90% of transactions taking place today outside the physical branch of the banks, they are able to save significant resources and costs, which consequently help to improve their financial health
APIs are helping banks expand their portfolio of products by letting them offer complementary products like insurance or products that they co-create with their partners and financial technology firms. Such portfolio expansion is possible only due to the versatility of APIs that connect with varying systems and facilitate exchange across industries.
APIS also make it easier for smaller banks to collaborate with financial technology companies that have the necessary technology, even if they don’t have the IT required for some functions. Smaller banks can raise brand awareness and increase client experience by collaborating with businesses that can offer enhanced functionality.
Finally, “Since the primary goal of FinTechs is to offer financial solutions, access to financial data is essential for them to develop new products and demonstrate their worth to potential customers. Therefore, Open Banking offers a significant potential to expand their clientele and product offerings. They should prepare for growing competition from established banks expanding their digital capabilities and fresh players entering the financial services (FS) market, he said.
