Fintech APIs continue reshaping the future of the financial services industry. According to G2 research, we already saw a 133% increase in traffic to the Financial Data APIs category from December 2019 to July 2020. There are millions of API calls per day: 15 billion for Twitter, 10 billion for Google, and 7 billion for Facebook. And it’s more to come. Thanks to FinTech development people can now manage their finances from the comfort of their homes instead of visiting a local bank or brokerage.
In this article, we’ll talk about the benefits of financial APIs, their use cases, and things to consider before choosing ones.
How Do FinTech APIs Work?
Basically, APIs act as building blocks for new solutions. Fintech API (application programming interfaces) serves as intermediary between different software components so they can communicate with each other. APIs enable the secure exchange of data between parties involved in financial transactions, including banks, third-party vendors, websites, and customers. They also contain a set of functions that can be tailored for any purpose.
How APIs Benefit Fintechs
API allows fintech applications to communicate with each other and a bank’s server. Some examples of fintech API include allowing users to access their account information when they log in to use a banking app or allowing a person to make purchases via payment processors like PayPal.
API benefits for fintech include:
- Increase in cost-effectiveness. Although it’s beneficial for a user to have numerous banking services, it is cost-prohibitive for banking institutions. Gen Z and its successors have high expectations of their online experiences. However, a financial institution can’t afford to develop one-off APIs for each new function. Thanks to the use of APIs, users can now enjoy a variety of services via different app integrations.
- Regulatory compliance. Financial institutions in the EU are facing the regulatory requirements of the European Banking Authority’s Payments Services Directive (PSD2). It requires financial institutions and those that receive electronic payments to open customer information up to third-party providers. To adhere to the regulations, financial institutions will need to find a way to provide customer data to the outside world while keeping data secure. Open APIs become the ideal solution.
- Focus on core functions. APIs provide the means to work with software companies that focus their innovations on the financial space. You can find a list of banking software developers here. With the help of APIs, banks and fintech companies can create new product lines to meet the needs of a much wider range of customers while at the same time opening themselves up to new markets.
- Great customer experience. Customers expect seamless integration between their phones, computers, and IoT devices. With APIs, fintech companies have the ability to create an omnichannel experience.
Fintech APIs Use Cases
Let’s take a look at some typical use cases where fintech APIs can deliver the most value.
Payment processing
Fintech APIs like Stripe and PayPal are used to process payments securely and efficiently from sources like credit and debit cards, bank transfers, and digital wallets. Businesses can customize the checkout experience with branding and tailor payment processing APIs to suit their needs.
Investment management
Fintech APIs are transforming investment management, making it easier for businesses to offer investment services. APIs like Robinhood and Betterment allow customers to invest in stocks, bonds, and ETFs and can be tailored to provide a personalized experience. Companies also offer specialized financial data APIs that can empower fintech firms to access real-time market data, historical stock prices, and other financial information, enhancing their investment management capabilities.
Personal finance management
Fintech APIs such as Plaid and Yodlee provide businesses with access to their customers’ financial information to develop new financial products. They also aid customers in managing money, monitoring expenses, and setting targets, as well as providing customized recommendations based on their patterns.
Best FinTech APIs to Use while Developing Your Brand-New Financial App
Financial institutions need API integration solutions in different areas. In this section, we will give some examples of the APIs we use: payment providers, bank information aggregators, and KYC providers.
Payment Providers
✔️ Stripe
Stripe allows users to process and manage online payments. It is used not only by financial apps but also by SaaS and custom commerce. We use Stripe for its secure transactions, easy-to-use reporting features, consistent service, and democratic fees.
Pricing (*at the time of publication): Stripe charges 2.9% plus $0.30 per successful card charge online. It costs the same no matter what type of card you process. For in-person card processing, Stripe charges 2.7% plus $0.05 per successful credit card transaction. You can get more detailed information about the fees on the company website or per request.
✔️ Marqeta
This open API platform allows consumers to instantly issue and process card payments. Marqeta is designed to create a tailored payment experience by:
- Crafting new card products. You can use open APIs to create new payment products and streamline supplier and workforce payments.
- Accelerating time to market. You can leverage existing relationships with issuing banks, networks, and card fulfillment providers to go live in days instead of months.
- Scaling globally. It’s easy to expand across the United States, Europe, and Asia.
Pricing (*at the time of publication): The fees are available per request.
✔️ MangoPay
MangoPay allows you to pay in multiple currencies and with various payment methods. All payment flows and commissions are automated with one single contract. MangoPay is designed for developers, so you can integrate the payment solution on your platform quickly thanks to our open-source SDKs. This payment provider keeps your payments and transactions safe thanks to multiple money laundering and anti-fraud prevention tools.
Pricing (*at the time of publication):
- Pay-in (per transaction excl. VAT) — 1.8% + 0.18€ (price for Visa and Mastercard)
- Pay-out (per transaction) — free (within the SEPA zone)
You can get more detailed information about the fees on the company website or per request.
Bank Information Aggregators
✔️ Plaid
At the start of their journey, Plaid was a fintech API company that developed financial service APIs and helps customers share their banking and other financial information more easily. But in 2018, it expanded its financial API offerings to a wider class of financial assets. We use Plaid as a bank information aggregator, for example, to provide transaction statistics on different bank cards.
Here are major Plaid benefits: reduced fraud, streamlined bank accounts authentication, comprehensive transaction history, user income validation, transaction geological tracking, and custom integrations.
Pricing (*at the time of publication): Plaid has two publicly disclosed paid API integration solutions – Launch and Scale. The Launch means “Pay as you go” and Scale is “$500+/month”. You can get more detailed information about the fees on the company website or per request.
✔️ Yodlee
Yodlee provides financial data aggregation services across institutions encompassing banking, retail, wealth, lending, and FinTech through APIs for financial wellness and insights. The service provides a seamless way to verify a customer’s funding source using an open API architecture. This enables them to quickly find out if the account is valid instead of waiting 1-3 business days for challenge deposit verification.
Pricing (*at the time of publication): The price of Youdlee’s integration services is available per request.
KYC Providers
✔️ ShuftiPro
It is a priority for financial services to first confirm the identity of the user every time. This is what KYC (know your customer) APIs do. ShuftyPro is an AI-based Identity Verification SaaS designed to eliminate risks of financial crimes, cyber fraud, and identity theft. Its main benefits are quick and accurate verification process, comprehensive global coverage, and two-fold technology.
Pricing (*at the time of publication): ShuftyPro pricing is available in the following plans:
- Free trial
- Start-up — $1,250
- Enterprise — $4,500
- Premium — you should contact the vendor to find out the exact price.
You can get more detailed information about the fees on the company website or per request.
✔️ Alloy
You can integrate Alloy anywhere you open accounts to unify and future-proof customer decisioning. The service makes it easy for financial service companies to safely and quickly onboard and manage more customers by automating the vast majority of decisions, mitigating fraud and high-cost financial risk, as well as reducing the burden on the back office and manual review queues.
Pricing (*at the time of publication): The cost of Alloy’s API integration is available per request.
Brokers
✔️ InteractiveBrokers
InteractiveBrokers provides customers around the globe with the ability to invest in stocks, options, futures, currencies, bonds, and funds from a single integrated account. Its suite of technology helps to optimize their clients’ trading speed and efficiency and perform sophisticated portfolio analysis. The platform boasts free trading tools, 100+ order types, and comprehensive reporting.
Pricing (*at the time of publication): The price depends on the type and version (Pro/ Lite) of the account. Visit the website for more information.
✔️ Apex
Apex offers a robust suite of APIs (with an enhanced developer portal) to facilitate the complete trading and investing lifecycle starting from account opening through regulatory support and everything in between. Apex APIs enable you to execute across major asset classes, including fractional order, book-keeping and stock locate support.
Pricing (*at the time of publication): The fees are available per request.
Financial Data Provider
✔️ Thomson Reuters
The service provider delivers critical information to leading decision-makers in the legal, media, tax, and accounting markets, powered by the world’s most trusted news organization. Tax and accounting APIs include:
- ONESOURCE — tax technology that helps companies stay compliant.
- Checkpoint — an online research suite of source materials, tools, and news.
- Onvio — cloud-based software that gives real-time access to documents, billing, projects, and more.
Pricing (*at the time of publication): The fees are available per request.
Communication services
✔️ Twilio
Twilio allows you to connect with customers through any means. You can make use of Twilio SendGrid Email API to send, receive, and manage emails or Twilio API for WhatsApp.
Twilio SendGrid Email API:
- Quick integration via API or SMTP
- Tools to optimize deliverability
- Real-time data and analytics
Twilio API for WhatsApp:
- Developer sandbox for application testing
- Managed WhatsApp container infrastructure
- API-powered text and template messaging
Pricing (*at the time of publication):
- Twilio SendGrid Email API — Starting at $14.95/month for up to 100k emails. Up to 40k emails free for 30 days.
- Twilio API for WhatsApp — Starting at $0.0042 to send a WhatsApp Template message and $0.005 for WhatsApp Session messages.
You can get more detailed information about the fees on the company website or per request.
✔️ Plivo
Plivo is ranked № 1 for customer satisfaction in the G2’s Cloud Communications category, with over 98% of clients rating Plivo at 4.5 or 5 stars.
It offers:
- SMS API platform allowing to send and receive text messages in over 190 countries globally.
- Voice API platform enabling clients to integrate voice calling functionality within their apps programmatically.
- MMS API platform allows clients to send and receive pictures and videos across phone numbers in the US and Canada.
Pricing (*at the time of publication): Detailed fees for every region are available on the company website or per request.
How to Choose the API Covering Your Needs
Here’s a step-by-step plan for choosing API for fintech:
- Define the features this API should cover.
For example, be able to retrieve and aggregate unique data, possess functions that are costly, require additional licensing, or are easier to integrate than develop from scratch. - Understand the project specifics.
You need to analyze your target market, legal restrictions, and competitors. You’ll also need to clarify the customer’s requirements and offer additional features that your competitors provide. - Make a list of API providers to research.
Other factors to consider before choosing an API:
• Your target audience location
• Cost
• Technical support
• Reputation
Considering all the factors listed above it will be easier for you to find the most suitable API option for your project. However, we recommend seeking professional advice on this matter from software development companies like Itexus. This will save you time and money. Itexus has been working in FinTech for years and can easily advise an API provider that suits an individual project best.
Once you have researched and compared different providers and selected the one that best meets your needs, it is time to integrate it with your financial software. Here’s what you need to do next:
- Test the APIs. Before integrating any APIs, it is important to thoroughly test them. This helps point out any potential issues before they become serious problems.
- Integrate the APIs. Financial API integration involves working closely with the API provider to ensure seamless integration and correct work of the API.
- Monitor and maintain the APIs. After integrating the APIs, you need to monitor and maintain them regularly to ensure proper functioning and timely updates.
Summary
Why reinvent the wheel if you can use a quality API to enrich your application with new functions? Fintech APIs help to mainstream a Financial app development process without sacrificing the quality of the final product. The challenge is to find the right financial API integration. Itexus experts are ready to lift this burden off your shoulders and consult on the best financial API for your next project. Just leave your request and we’ll contact you back.