Leading banks are joining forces with Fintech API players to offer a more inclusive and digital payments and banking experience to their customers. Recently, Yes Bank had collaborated with a Fintech API platform to offer connected banking services and UPI services to its customers.
Instead of being a one-off occurrence, the collaboration between banks and fintech is here to stay. And a chief driver of these strategic associations happen to be Fintech APIs.
It started in 2017. and were amongst the first few players to take the lead towards leveraged APIs to foster innovations. From Data Analytics to Payments Security, APIs proved their mettle in every regard. Thus, pretty soon, other leading banks joined suit, a trend that is likely to ensue in the months to come.
Furthermore, the Fintech API platforms are leaving no stone unturned in creating APIs that develop payments solutions for Bharat. Be it voice-based payments, POS Solutions, or digital payments solutions, Fintech APIs are pushing for financial inclusion across borders and geographies.
APIs are the future, given their unique ability to allow fintech players to innovate, transcend borders to support financial inclusion, without exorbitant costs. Leveraging APIs, banks and fintech players together can usher India into an era where the underserved are served and the unbanked is banked.
Customer Experience takes Precedence
With APIs, banks can build a completely digital banking experience for customers. This includes mobile banking and online banking. That’s truly significant for India to outpace the rest of the world in digital payments.
As per the Ministry of Electronics and IT, Financial Year ‘22 witnessed a total of 7,422 crore digital payments, a 33% hike since Financial Year 20-21. UPI was the most preferred way of digital payments, accounting for a total of 452.75 crore transactions, with a combined value of 8.27 lakh crore.
This is in sheer contrast to a decline in branch and ATM banking services. For the next wave of consumers, payments and banking systems would need to go completely digital. By utilizing a trusted API from a reliable Fintech partner, banks will be able to extend a truly digital experience to their customers without any major overhauls in the existing system or significant overheads to improve the digital infrastructure.
Faultless Data Analytics
As per Gartner, 25% of the B2B Interactions are performed by APIs. And the number is only set to rise in both B2B and B2C transactions. With an unprecedented growth in APIs, Fintech players & Banks are now able to gather significant consumer data. APIs act as digital intermediaries, helping Fintech Players & Banks pull in data from multiple sources.
Data is the new oil, especially in this age of hyper-personalisation. Banks and Fintech players, in tandem, can leverage this data to create more products and services, payments solutions, amongst others, that the consumers are looking for.
What the future holds: API-First Approach
In times to come, India should be on a lookout for Fintech players adopting an API-First approach. Across the globe, API-first platforms have found their way to the Unicorn Club, with valuations over a billion dollars, including Plaid, Stripe, and Segment.
Even as APIs are the unsung heroes of India’s financial inclusion, they can directly impact the bottom line. By fostering innovation with hamstrung development costs, better consumer experience and faster time to market, APIs are the harbinger of innovation in the payments space.
(The writer is Founder, FidyPay)