What is API Banking? Guide to API Banking for anyone

What is API Banking? Guide to API Banking for anyone

API banking is a unique, advanced, and innovative way to improve communication between the clientele server and the bank. It makes use of JSON/XML codes and makes data transfer seamless between the two systems. Here’s your guide to everything about API banking. But what is API Banking?

What is API Banking?

By API banking definition, Application Programming Interface uses XML/JSON codes for enhancing communication between client servers and the bank. By doing so, it makes data transfer between the systems smooth and ensures secured integration between the bank’s and customer’s systems. API Banking helps customers perform banking transactions easily without toggling the ERP or Enterprise Resource Planning platform and the bank.

Outlining the Benefits of Bank API

There are multiple benefits of API banking, and to mention some of them, you can follow the following pointers:

  • Instant solution and direct integration – Real-time solution to process banking transaction
  • Secured and seamless medium of integration – Exchange files or data in the encrypted environment
  • Extremely efficient banking mode – Reduces the turn-around time concerning banking transaction as initiation and reverse status on the customer system based on real-time
  • Easy reconciliation and Saves time – You no longer require visiting the bank or manually uploading the transaction files

Bank of Canada Exchange Rates API

To broaden the concept of exchange rates API; here’s highlighting the pointers:

  • Daily Exchange Rates
  • Monthly Exchange Rates
  • Annual Exchange Rates
  • Daily Exchange Rates Lookup
  • Canadian Exchange Rates (the CEER index happens to be the weighted average of bilateral exchange rates for Canadian dollars against currencies of Canada’s trading partners)
  • Foreign Exchange Intervention (updated when the bank intervenes in the foreign exchange market)

About exchange rates

To do so here’s highlighting two significant processes:

Understanding the exchange rates

Talking about the foreign exchange market, it determines how much the Canadian dollar is actually worth. If you consider the Canadian Bank, one must intervene to support the value accordingly.

Background information on exchange rates

As per the API banking firmenkunden, it is imperative to first consider learning about publication and calculation methodologies for the FX or foreign exchange rate data on the Canadian bank’s website.

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Deconstructing API Bank Models

API banking models get classified broadly into three classes, including:

  • Platform banking or API banking platform
  • Banking as a service, and
  • API Open banking

Types of Bank Login API

The banking industry is emerging to the open-source model through APIs. As per the report, there are three ways of logging in API through the following banking APIs:

Private API

The APIs get commonly used within a traditional banking institution for the purpose of augmenting the efficacy of operations. The set of APIs gets viewed as essential by the banks due to the fact that they significantly reduce development time for building new systems or customer-facing applications.
In return, what it does is, maximize productivity. Instead of creating apps from scratch, what developers can do is, draw from the common pool of private APIs.

Open API

The set of open APIs has become famous in the 21st-century banking hub. With the API in banking industry getting prominent, the APIs avail the data for the third parties that might not enhance the formal relationship with the banks. The open banking initiative ads improve the whole digital banking solutions.

Partner API

According to API banking Deutsche bank, APIs get used as the interface between banks and their business partners. In return, it helps the banks to expand product lines and services, to mention a few. Does it sound confusing? Well, here’s to learning further on this front.

Any bank may work with a third-party company to create the loan documents automatically. This gets done for numerous loan app that banks receive. By working in this manner, banks will be able to work together with the partners to troubleshoot the common problem by sharing APIs accordingly. This may increase the efficiency of the bank and allow for the automation of loans.

Classification of Bank APIs by Functionalizes

These get divided into different categories such as:
Core API in banking: It encompasses APIs used for savings accounts for cash deposits. APIs help with cross-border payments.

Card Issuance APIs: With the most effective API banking strategy, they allow creating, managing, and distributing the physical and virtual cards. These get used for creating the cards for the businesses.

KYC APIs: As per API banking use cases, this set helps in identifying the retail customer or business. It helps in reducing onboarding time for customers, ensuring seamlessness.

Lending APIs: APIs help in offering credit to the customers. They offer information that loan officers need for making effective lending decisions.
Acquiring APIs: This particular set of APIs encompass payment gateway APIs as well as online card acquiring APIs! Online card acquiring APIs enable the companies to accept any kind of payment with the cards or even internet banking!

The emergence of API Banking

As per the API banking wiki, the historical roots of the evolution of API banking have its roots in 2016 when CMA or Competition and Markets Authority asked different top-notch banks to offer access to the data to the third-party apps. The decision came as a result of multiple small steps taken to open banking.

After some time, PSD2 emerged at the forefront and made a prominent contribution to the evolution of Open banking. With that, UPI or Unified Payments Interface played a prevalent role in the emergence of API banking. The procedure of sharing data through the bank APIs get demonstrated as API banking.

Adoption of API Banking Definition

With the adoption of API banking, it has fueled the development of newer entrants. Additionally, API banking also brought changes to the way fintech organizations and banks work.

So, this was your guide to everything about API banking. Now that you have learned the nitty-gritty of API banking, you can hire the most effective API banking services and proceed seamlessly.