Top 5 API Banking Use Cases

The other day, I was having tea with a mentor of mine who is a few years from retirement. She and her husband stumbled upon a little patch of heaven about an hour away from the city.

It’s a 100-year-old refurbished farmhouse, surrounded by 80+ acres of well-maintained pasture and  picturesque rolling hills. As if that wasn’t perfect enough, she can relax from their wraparound porch overlooking a tranquil, two-acre pond — the ideal place to relax and unwind. So of course, they bought it.

It’s a dream come true for my mentor, and I was excited for her. I had to know her secret to finding this jewel. Naturally, the next question out of my mouth was, "How in the world did you find such a stunning place in a perfect location?"

That is when the dreaminess of the story broke down.

The behind-the-scenes mechanics of a process are rarely as glossy and beautiful as the result, right? Anyone who’s bought a home knows this. My mentor’s search and purchase experience sounded, well, way less beautiful than the property.

There were so many details and steps, so much back and forth. She’d found the listing in a local real estate magazine, had to contact her realtor, wait a few days to hear back about whether it was still on the market, outbid other buyers, go through weeks of back and forth with the mortgage company (which had a system that was modern when our parents’ parents retired), and so on.

It's 2020. No matter how many cringey things that has grown to mean, it also means we live in a digital age where the latest recipe, a new house, and a mortgage can and should all be accessible through the supercomputers we call phones.

So why wasn’t there a better way to find and buy property? This is where my brain loves to play. As a co-founder of a software development company in the fintech space, I knew there had to be another way to alleviate at least some of the headaches that had stolen my mentor’s joy of finding her dream home.

After all, this is why application programming interfaces (APIs) exist. They connect systems and share data between them, even if each system characterizes the data differently. Ultimately, the goal is to make life easier for the end user.

This is leveraged by many verticals, but (as you can probably guess) I believe there’s a special place in the financial world for APIs. In a world where Google offers checking accounts and Uber offers credit, the path to profit is paved by simplifying life for the end consumer.

If your business is a financial institution, and you haven’t considered integration using APIs, why not?

To get you started, here are five of the most common use cases for APIs in financial technology.

Most common API banking use cases?

#1. Digital Banking

What it is: Digital banking is the automated delivery of new and traditional banking products and services directly to customers through electronic, interactive communication channels.

Why they do it: Expand service offerings to better compete with traditional banks.

Who’s doing it well: Constellation Digital Partners leverages the power of APIs to connect credit unions and fintechs to expand offerings to members.

#2. Account Data Aggregation

What it is: Exactly what it says it is.

Why they do it: To enable a person or a company to view data from disparate financial accounts in one place.

Who’s doing it well: Plaid uses APIs to connect people’s banks to apps like Venmo to bring payment options to their phones.

#3. Residential Mortgages

What it is: With the use of APIs, mortgage companies can process applications around 20% faster than lenders without connections to technology.

Why they do it: It’s a process improvement that drives customer satisfaction.

Who’s doing it well: Ellie Mae® Digital Lending Platform helps lenders streamline their entire process through API connections.

#4. Information Verification

What it is: Automated fact checking made possible with APIs.

Why they do it: Many times, one system gets an entry from a user that needs to be verified against a source of truth, such as a bank statement or home valuation.

Who’s doing it well: Zillow uses an API that enables one system to “call” another to get home prices and other information you need.

#5. Account Origination

What it is: Streamlining a legacy financial process.

Why they do it: Serve customers quickly and painlessly via the internet.

Who’s doing it well: Thanks to technology from companies like Meridian Link, account origination, digital lending, and more can be integrated via APIs to financial institutions.

Core10 is a services company that specializes in API integrations, and we’ve completed several projects for clients in all these areas.

When working directly for WalletFi, we enabled their platform to help their consumers transfer credit cards by leveraging Plaid’s data aggregation technology. Our work with Constellation has helped credit unions offer easier account openings through Meridian Link and by providing access to services from fintechs like WalletFi.

A well-constructed API can improve so many daily functions. I can’t help but wonder what could have happened if my mentor’s realtor or local bank had used the technology available to them. Instead of sharing her frustration with the process, she might have been a loyal advocate for their business!

Are you building features and processes that grow customer satisfaction? How can Core10 help you use APIs to build your business today?

FAQ

• What are the 4 types of API?

There are 4 types of API commonly used: public, partner, private and composite.

• Do banks have API?

Yes. APIs have become particularly significant to banks and fintech over the past years. They are becoming more and more important as financial institutions implement cutting-edge technology solutions.

• How is API used in banking?

APIs are used for multiple different purposes. Some of them are communication between bank and client servers, making data transfers between them, and ensuring secured integration between the customer's and bank's systems.

• What are some of the use cases of API in banking?

Here are some of the use cases of API in banking and financial services:

• Digital Banking
• Account Data Aggregation
• Residential Mortgages
• Information Verification
• Account Origination