APIs Driving The Present And Future Of The Fintech Industry

Since the advent of Application Programming Interfaces (APIs) in the Finance and Fintech Industry and their tremendous success, they have been a hotcake and many sectors quickly realized and grabbed this opportunity. Every sector welcomed APIs with open arms and integrated them with their processes, applications, and features. This benefitted not only the sectors but consumers too got an amazing experience.

The APIs are proving to be a boon and are firmly proving their benefits. In India, almost all major sectors are utilizing the benefits of APIs, with many on the cusp of adopting them. With the sheer volume and ample opportunities available for businesses in India, APIs can drive the future in many ways and can find enhanced adoption in the near future.

The Fintech sector in India:

The Fintech Fintech Industry is booming in India and as per reports, India has the highest Fintech adoption rate globally at 87%, much higher than the global average of 64%. The number of startups in this sector is also increasing with each passing day. As per estimates, the Fintech industry will reach a valuation of USD 140 billion by 2023. This will create huge value and extensive opportunities in this sector.

The significant change brought by Fintech APIs in India:

In the present scenario, APIs have created a great impact on the payment sector in India. Consider the biggest example of a Unified Payment Interface (UPI) launched by the National Payments Corporation of India (NPCI) in 2016 which heralded a new chapter in the finance sector and the fintech became prominent. It changed the whole perspective and defined the true success of Digital India. With each passing year, the volume of UPI transactions is increasing at a great pace. As per the data available on the NPCI website, in January 2023 alone, 8,036 million transactions of amount Rs. 12,98,726.62 crore were carried out.

This shows the quick adoption of UPI by people and businesses in India in carrying out their transactions. The great news is that the homegrown UPI technology is finding admirers and takers in many countries across the world. Such is the impact of UPI and similarly the API in the finance and fintech sector. This is only one example and there are numerous success stories of API integration in major sectors.

APIs solving compliance issues and spearheading the digital revolution:

APIs help achieves a high level of compliance in the extremely regulated financial markets. The API system offers robust identity verification techniques which not only protects user data but also helps consumer get the best of experiences and businesses provide what consumers need.

The wide-scale adoption of APIs in Fintech is indicative of the shift towards an API-based financial ecosystem where safe, accessible, and reliable data of the person is ensured, while users have multiple choices. APIs have become synonymous with digital financial services. The financial ecosystem stakeholders like banking organizations, data-enabled tech companies, and fintech firms are revolutionizing the sector not only in India but the world over.

Especially the COVID pandemic accelerated digital adoption, and mobile-based and web-based banking and payment became the preferred mode. It also highlighted the importance of digital financial services and the fintech sector. In India with a major chunk of the youth population and with their increasing need for customized and convenient experiences and facilities, APIs will drive the way forward.

The collaborative way ahead:

In this era of excellence where consumers are the king and there is an ever-growing requirement that the products/services being offered should be the best, businesses should accordingly adapt to the changing needs and offer customized solutions. But no business can be a ‘jack of all trades.’ For this, they need to collaborate with the product/service partners to reach out to their target audience with their choice. This became the focal point for banking and non-banking entities. While banks had a gold mine in the form of humongous customer data, the non-banking and fintech entities had the technology to collect the data and provide the best services to consumers through data science. This gave birth to many Neo banks, Digital banks, and API aggregators who found immense potential in this segment, and this definitely proved to be a win-win situation for all.

If we consider the Fintech Industry, then there are many fintech API providers which are providing the required setup and acting as a gateway between financial organizations, non-bank businesses and fintech companies. Banking-as-a-Service (BaaS) platforms are coming in here which act as a middle layer or an API-based BaaS layer. This middle layer integrates with banks and other regulatory players at the back end while providing the required infrastructure for fintech and non-bank businesses to engage with the customers at the front end.

The usability of APIs in the Fintech industry:

In the era of information and data where everything is expected and delivered at a great speed, it is pertinent for businesses to ramp up their infrastructure to provide what people want. The Fintech industry has especially made its strong presence in the market and amongst consumers by integrating technology and innovation in its offerings. Let’s see some of the services being provided by Fintech companies through open-banking APIs:

• Providing account balances and processing vendor payments at high speed.
• Banks, financial institutes, as well as consumers, can get their credit scores checked and accordingly the credit-related process for offering loans could be processed fast, overcoming the administrative hurdles through open-banking APIs.
• The customer can view his/her entire financial information including assets, and liability quickly and with ease.
• Providing cards, wallets, and other financial services.
• Providing identity verification services for various government initiatives and schemes.

With an ever-increasing demand from businesses for identity verification services, RPACPC provides one-stop tech-based innovative API solutions for PAN-Aadhaar linking, PAN Status, GST Verification, 206AB Compliance Check, Match PAN name, TAN-PAN, PAN Advance, PAN DOB, GST Advance, GST from PAN and PAN IT Status and many more. This greatly helps businesses to complete the mandatory compliances all in one place resulting in considerable time and cost savings. RPACPC helps cut down the manual tedious process of identity verification through easy, robust, real-time, and legitimate API solutions.

With plenty of service providers already offering superior customized solutions to consumers and the market still open for new players, the end consumer is the real winner. With a plethora of options to choose from as per his/her liking and at a rate that is most suited to the needs, the customer experience factor will definitely be top-notch.

APIs aiding Government of India initiatives:

The Government of India is also making full utilization of the APIs to drive various initiatives. For example-

• If we talk about Indian stack open-API platforms, then there are some great initiatives like Aadhaar, Bharat Bill Payment System, and GSTN.
• Under the Aadhaar project, the Biometric Identification database of more than 1.2 billion citizens has been enrolled. This has greatly helped the government to eliminate bogus entities and to directly take their schemes to eligible people.
• The Jan Dhan Yojana – Aadhaar – Mobile trinity helped the government to make direct transfers of INR 740 billion to the eligible beneficiaries.
• Government’s flagship initiative Startup India is helping create a strong startup ecosystem in the country. Through APIs, it has been able to connect startups with various initiatives and schemes.

The future of Fintech APIs in India:

The future holds great potential for APIs in Fintech with greater roles and extensive applications expected. The banks and other financial organizations will mostly outsource their products and services distribution to third-party fintech companies and others. Creating customer engagement and serving customers through customized offerings and value-added services will be handled by the third parties engaged. These third-party firms will help banks to increase their customer base and also to increase their penetration in areas they aren’t serving.

Associated services like investment and lending definitely offer exciting space and opportunities. For an economy as diverse as India, there is a treasure trove of opportunities and there is an increasing need to collaborate on various fronts to cater to the diverse range of consumers and their needs. This will be a win-win situation for all the stakeholders. As the penetration and usability of API services further increase in India, consumers will get access to a wide landscape of financial services. This has great potential in future just like our home-grown UPI to challenge the global players and make a mark in the global ecosystem.