Financial API: Driving innovation in payments and banking

Published on Oct 23, 2022.

9 minutes reading

A little while ago, being a part of the financial universe by providing solutions for payments and banking was a reality limited to major institutions. Fortunately, it’s changed, and today we see an industry in high demand and more attractive and tailored offerings. What has enabled this movement? Apart from some regulatory flexibility, of course, the answer is: Financial API platforms.

As in other sectors, innovation has gained scale and the market has become more competitive as technology has been democratized through APIs. This made players of all sizes and segments able to offer high quality digital products. In fact, many experts say that we are living in a API Economy.

In the financial sector, this facilitated the advancement of fintechs, accelerated the Financial inclusion and spurred innovation. In this article, we will explain what is Financial API, give examples of use and solutions available for businesses that want to launch or improve payment solutions. Check out!

What is an API? What about a Financial API?

But what is an API? The acronym stands for Application Programming Interface.

In other words, it refers to a set of programming methods which allows different systems to connect. It is similar to a bridge connecting software to other applications in order to offer solutions associated with digital services.

Google Maps is a well-known example of an API. By using it, websites looking to access resources can only integrate with the interface, eliminating the effort required to develop their own maps from scratch.

In turn, Financial APIs represent microsystems which enable functionalities, products and financial services to be offered, allowing banks, fintechs and companies to further improve their user experience.

How can we use a Financial API?

Want to see a Financial API in action? When choosing what to have for dinner and how to pay for it on a food delivery app, you can choose to connect to your digital bank, right? That’s only possible because an API has enabled that functionality by leveraging programming.

A common use for a Financial API involves financial service offerings on platforms for companies which are not part of the industry. That’s the case for retail chains and phone companies starting to offer products such as digital wallets, credit cards, and more.

Another common use for APIs involves banks and fintechs that already have financial solutions in place, but are looking to plug new functionalities to their platforms, without the need to develop them in-house. Actually, that’s a very common use for accelerating innovation within those institutions and making them more competitive.

What services can be provided by using Financial APIs?

When APIs are used in the financial system, fintechs, banks and other institutions are able to improve the user experience, automate processes and reduce errors. Furthermore, technology allows companies from different sectors to develop their own services and financial products with greater agility and using functionalities already tested and validated.

But why does a Financial API usually mean speed and agility in those processes? Because it allows companies to focus more on conducting business strategies than on developing new technologies, since they can get ready to plug to their solutions through an expert technology provider.

Dock is one of the expert companies working on developing APIs to build up this ‘lego’ in the payment and banking industry. By using our global and modular Financial API platform, we provide our clients with solutions within four pillars ‘as fast as an integration’. Learn more about it below:

Digital Banking

You probably have already noticed that the financial industry is experiencing a major transformation, where services are no longer offered exclusively by traditional banks.

That’s because the APIs for Digital Banking are one of the vectors which have enabled that transformation so that any company or institution can have their own ‘bank’, with their look & feel and business model—in a quick, streamlined manner.

Both for fintechs —which will have their main activity in those services— as well as for businesses from other sectors that decide to work in the financial segment, having your own bank through Financial APIs includes countless advantages, such as:

providing financial services without bureaucratic procedures required to become a financial institution;
optimizing your business financial management, streamlining transactions, and reducing costs;
expanding your portfolio, including financial services, improving customer loyalty and potential customer attraction;
delivering an improved customer experience.

Discover our video Banking solution :

Issuing and processing cards

The Financial APIs that act in the issuance and processing of cards allow you to configure credit cards and debit, physical or virtual, prepaid, benefits and multiples.

For retailers, for instance, issuing their own card can be a good alternative in order to improve customer loyalty and drive sales.

By offering a card to your client, you allow them to access credit, promotions, and many other benefits that will make your business much more attractive, solidifying the relationship with the client.

Plus, from data records and transactions you can better understand consumer behavior and create loyalty programs, among other initiatives.

Discover our video Financial API based solution for Cards & Credit:

Acquiring

Acquiring is nothing more than the payment technology that allows communication between the store, the card brand and the issuing financial institutions.

In a nutshell, we can say that acquirers – or acquirers – intermediate electronic payments, such as those made via cards and Pix.

In this context, Acquiring Financial APIs can serve from consolidated market players, who seek more efficient and personalized solutions for their businesses, to entrepreneurs who want to enter with a complete infrastructure in the universe of means of payment .

Learn about our solution based on Financial APIs for Acquiring:

Fraud prevention

Using Financial APIs is also important in preventing fraud in the payment market and banking.

By following thorough stages, technology allows companies and institutions to prevent fraud without losing healthy transactions, thus ensuring more peace of mind and an improved user experience.

Meet our and technology Fraud Prevention based on Financial APIs:

Financial API platform: How does Dock contributes to unlock your company’s full business potential?

Financial APIs are developed by companies like Dock, a technology provider for payments and banking. Based on them, even companies that are not originally from the financial industry can provide solutions without the need to go through a long development and validation process in-house—unlocking their full potential to join this industry in high demand.

Nowadays, our global and modular platform is the only one providing solutions for the entire payment and banking ecosystem, with over 20 years of experience and over 4 billion transactions a year through our clients.

Want to understand more deeply how we do it and what moves us? Watch our video manifest:

Financial API: Takeaways from this article

A Financial API is a set of programming methods which allow different systems to connect;
Financial APIs enable financial services, products and functionalities to be offered more quickly, as well as allows companies that are not from the financial universe to have their own ‘bank’;
By using Financial APIs, it’s possible to more quickly develop solutions for Digital Banking, Issuing and Processing cards, Acquiring, and Risk & Compliance;
Based on APIs, Dock has a tailored platform in place, offering everything a business needs so that they can provide financial solutions, without having to go through a long development and validation process in-house.