Are you ready to implement open API banking models?

The open API model is quickly being adopted by core banking systems, presenting competitive opportunities to community banks and fintechs willing to integrate API processes into their banking infrastructure. When open APIs are accessible to banks and financial institutions of all sizes, it creates an equal playing field where community FIs can offer the same tech products as big banks.

This means there is a huge opportunity not only for these community FIs but also for the fintechs who sell software to them!

Why Fintech Open API Banking Is the Future

If your core banking systems are not set up for APIs, it means your system is isolated from the outside world of data sharing. While your data is contained, it also cannot work with new services that benefit your end users. 

The open API model for core banking increases your institution’s ability to stay relevant while improving the customer experience. It opens the door to a broader array of service offerings with the potential to preserve revenue and increase profitability.  

Think about the API models already operating in the mainstream for context. The Robinhood Investment App connects directly to bank accounts; Paypal and Venmo are bank connected and third-party cash transfer services are frequently embedded within big-bank platforms. 

By adopting open APIs your bank can offer more and better services while increasing customer access to popular integrations. Better yet, implementing these integrations and services is a breeze when your core banking system is utilizing an open API model.

Benefits of Operating on Open API Framework

Utilizing an open API framework comes with countless benefits. Accessing the same proprietary code base used by big banks means every institution can offer the same suite of services. 

It makes sense on every level to update core banking systems to close the biggest obstacle preventing modern Fintech from benefiting banking institutions (via APIs).

The open API core banking framework is a great option because it:

• Is more nimble and adaptable in the modern market.
• Opens up more service options for financial institutions.
• Improves functionality across banking platforms.
• Elevates the customer experience.
• Enables Fintech developers to create more impactful products.

While these are all major benefits to banks and fintech developers alike, they are only a few on a long list of benefits. The improved customer experience often tops the list of priorities for FIs and for good reason. Retention is a major concern and keeping customers happy is much easier when access to Fintech is broad and not only available to the large institutions. 

Open Banking APIs = Big Opportunities

Moving beyond the obvious benefits, the open API model also opens opportunities that impact your bottom line. Say goodbye to the days of long lead times on planning, funding and staffing large development teams to release basic services. By tapping the standardized code you can: 

• Efficiently add and increase revenue streams.
• Increase customer lifetime value and retention.
• Respond quickly to changes in market demand.
• Stay relevant and competitive with large institutions.

Adding new products and integrations is a breeze and things that once required a year to develop and implement can now happen in a matter of days or weeks. The customer benefits from modernized products with excellent user interfaces. Your business also saves on development costs because the code is standardized. Overall, it’s a cost-savings system with access to an endless array of service offerings that can increase revenue.

How Is this Regulated?

Regulatory standards in banking are firm but utilizing third-party apps and services isn’t a concern with proper vetting. Banks can partner with Fintechs that follow regulatory compliance standards and complete due diligence to better serve their partners. 

The standardized code base is what drives these third-party developers to create and improve processes and systems that can positively impact a large number of financial institutions and end users. Ultimately, we will see more innovation as a result of more institutions adopting the open API model and it’s in the interest of Fintech to build new solutions with compliance in mind.

Digital payments, money transfers and actions taken through these new systems will all remain regulated. You can always research new services and confirm compliance before implementing anything within your own business. 

Take the Competitive Advantage with Open APIs

Think about the last time you developed a new product from scratch. The costs and time associated with that process are intensive. While big banks can resource new product development regularly, smaller community FIs and fintechs simply can’t maintain a big budget for development. By integrating Open APIs into your system, you can compete with big banks while saving time and capital.

Are you ready to access more revenue for your Fintech by building flexible APIs? Get in touch with the team at Core10 to see how you can improve the customer experience while increasing your bottom line.