Value-driven experiences led by API in Fintech

July 20, 2020

Below are tangible &intangible values that APIs delivers:

APIs unlock the full potential of developer’s creativity, and developers can apply a full range of new program designs to craft truly innovative products and services. APIs are the foundation for any modernization effort, and they have the potential to help change the velocity of innovation within the company. Companies that provide access to data, systems, and infrastructure, are offering a connected experience that will encourage collaboration and ideation throughout the company and move the business forward Effective APIs can give existing & potential customers a way to interact with business & connect on an individual level to share experience with others. API Strategy has made it possible for a company not only to improve customer engagements but also create new product & new channels.

1. APIs are powering innovations

2. APIs enable businesses

Connect with customers

Effective APIs can give existing & potential customers a way to interact with business & connect on an individual level to share experience with others. API Strategy has made it possible for a company not only to improve customer engagements but also create new product & new channels.

Streamline operations

Any organization can develop their own APIs for use of their own employees. This enables departments within the organization to access the more data conveniently & securely, allowing only desired individuals who are authorized to have access. APIs can improve operational efficiency & customer service for organization

Fast transformation from concept to reality & agility

Once ideation is done by an organization based on potential services & products, then arrives the stage to productize it using APIs. Many companies hit the marketing by releasing an MVP. Most organizations have embraced Agile Methodologies, especially working in sprints & demonstrating MVP to customer. By enabling this, companies can distinguish between required & desired capabilities, adding value to the product but also a quick hit to market to grab the API enablement opportunity.

3. APIs help generate revenues for organizations

APIs are the cornerstone of what is widely seen as the next iteration of business development, where having well¬-developed APIs establish and maintains relationships customer & partners in a digital economy. APIs are the version of a web presence, allowing others to access and integrate your data and resources into their public or private sites and applications. APIs are made available to consumers for free, but then monetizes through consumers paying based on engagement and API subscription plan.

4. APIs are backbone of platform business models

Envisioning APIs as individual productized services& packaging theninto Platform-as-a-Service are possible. APIs are core for PaaS as a part of cloud computing. APIs are designed in such a way that they provide access & functionality for cloud environ- ment, allowingintegration with databases, messaging systems, portals & other storage components.

5. Cross platform capability

Many environments today do not use only one cloud provider or even platform. There is a need for greater cross-platform compatibility and more providers are offering generic HTTP and HTTPS API integration to allow their customers greater cloud versatility. Furthermore, cross-platform APIs allow cloud tenants the ability to access resources, not just from their primary cloud provider, but from others as well. This can save a lot of time and development energy since organizations can now access the resources and workloads of different cloud providers and platforms.

6. APIs open the doors to integrate systems & ecosystem without hurdles

As Gartner notes in their report “APIs and integration technology are intimately correlated. Integration technology reduces the time to value of the APIs and APIs facilitate certain aspects of integration. APIs and integration are just two sides of the same coin. API initiatives require integration technologies and API-enabling technologies are essential components in each strategic integration infrastructure.” APIs are critical to addressing the complex integration needs and concerns of the modern enterprise, so it makes sense that an integration platform that can also be used to create and manage APIs to help companies realize the value of their technology investments whether they are on-premise, SaaS, in the cloud, or on either side of the firewall. Enterprises don’t need to rip and replace their legacy systems or integrations, but instead can connect all useful data to make better business decisions and create competitive differentiation.

7. Online marketplaces- API marketplace

In a nutshell, an API Marketplace goes beyond facilitating an API developer portal. It provides a mechanism for various group of people to design, publish, provides tools, documentation, and incentives to encourage the group to keep evolving the APIs. API Marketplaces ensure the widespread & effective use of APIs to maximize the values & benefits.

APIs in Payments

APIs have transformed the way we purchase, and now they are completely changing the payments experience. Customers demand robust, protected, connected, and smart digital payment services. In a complete payment space, most of the companies are adapting to an API-first approach in their product development. This is because APIs secure a competitive advantage and enable innovative payment solutions. What is more, APIs stimulate the development of a dynamic ecosystem.

Values of APIs in Card Management Systems

1. Seamless Issuing of Cards

Issue multi-use or single-use virtual cards, manage cards, and monitor transactions with a single integration Integrate using APIs to issue and manage cards based on your existing framework

2. Frictionless expense management

Issue cards for real-time payments in domestic and international currencies Cardholders can make payments with zero international transaction fees Set spending rules, such as allowed currencies and merchants, as well as daily or monthly spending limits

3. Powerful workflows

Unlock enterprise-grade card issuing capabilities with enhanced APIs. Issuing APIs are fully compliant to level 1 PCI-DSS standards, which means no need to worry about additional certification requirements. APIs allow automation of key financial processes, delivering better customer experiences

4. Build your own ecosystem

Bring customers and ecosystem partners together by integrating with best in class cards, multi-currency wallets and payments solutions. Increase your platform revenue by offering a comprehensive suite of adjacent financial services products.

Values of APIs in Retail

1. Improved customer journey

Release APIs to unlock store inventory data; then expose that data through self-serve kiosks in the store, internal departments, as well as to partners and other businesses.

Use APIs to increase revenue using digital touchpoints that can be reused by other retailers to optimize inventory, improve employee productivity and engagement.

2. Tap to immense growth potential

APIs provide an excellent opportunity for retail business to grow because they can give customers exactly what they are looking for Payment APIs allow shoppers to pay for their purchases online in an extremely easy and secure manner.

3. Engagement using customer facing apps

For customers, interacting with a payment provider can often be a tedious and long-winded process. Determining what customers need and creating APIs that enable functionality, paves the way for great apps that can be updated in an agile and iterative manner

4.Third-party apps & online stores

Merchant clients that are expanding their business from an online or mobile perspective need web APIs that make payments easy for them. By meeting this need, payments providers demonstrate their ability to compete with established players in this space, such as Stripe, Braintree and others.

Values of APIs in PayFacs

1. Frictionless Onboarding

An Onboarding API can support streamlined processing and fast approval of sub-merchants for underwriting PayFacs can enable an API for contracting and onboarding customers for payment acceptance as they configure software for them

2. Smooth chargebacks

Effective chargeback management needs an API to fully automate the process, avoiding costly and time-consuming manual steps on the part of the PayFac.

3. Transaction tagging

When PayFacs onboard a merchant, they need to be able to tag transactions like Authorizations, Captures, and Reversals, to the appropriate merchant in the code Essential transaction level APIs are flexible so PayFacs can provide financial incentives

4. Omni-channel support

The payment APIs provided for handling sub-merchant transactions need to be flexible and support a variety of card-present and card-not-present payment methods. An Omni-channel API avoids complexity to design without complicating downstream maintenance

Values of APIs in Payment Gateway

1. Flexibility

Payment gateway APIs allow developers to integrate Omni-channel payments so clients can do business how they see fit. Supports a variety of payment types, like ACH, Debit, EMV, Wallets, Credit, BNPL etc. This enables organizations to stay competitive and offer whatever options will best meet the needs of each individual client.

2. Real-time purchasing data for dynamic decisions

A well-developed payment gateway API system provides a ton of data beyond simple payment information & the real-time data feeds can be used immediately to help you understand and act on buyer behaviors. Easy access to this actionable data is key to driving to business forward

3. Seamless Integration

Any ecommerce, retail, or service provider can enable their customers to make payments to their banks in couple of days by subscribing to APIs Time to Integrate Payment Gateway with mobile apps,ecommerce websites, kiosks & POS, are accelerated

4. Enhanced customer support

Customers & Integration development teams need to connect, monitor & follow up instantaneously on issues like declined transactions or chargebacks APIs leverage customer relationship & communications over chats, mails, voice calls & texts

Values of APIs in Banking

1. Speedy integrations and connectivity

With open and secure data APIs, financial technology sectors can create, catalyze, and distribute innovations faster Financial apps get to market before competitors & enables them to connect to user permissioned financial accounts and transactional data, in order to perform the tasks users need and desire

2. Superior user experience to customers

APIs leverage digital banking and money management to account verification and payment processing services API can help to provide a personalized, configurable, and responsive flow to engage customers

3. Near real time access

Banking apps need to be able to function anytime, anywhere, and on any device. Customers need to be able to connect to their bank accounts, view their available funds and recent transactions, and complete financial transactions quickly. APIs helps customers seeking approval for loans, buying and selling stocks, opening new accounts, making online purchases and engaging in other transactions.

4. Data management and security

The most efficient APIs can power apps with a robust set of permission-based consumer account and transaction- al data, while adhering to bank-level security requirements. Effectively managing data is also key for regulatory reporting and the right API can help

Let’s consider a simple case – Suppose you are at the cafe, and you order a burger and a cold coffee and you are asked to swipe your card into a point-of-sale device to pay.Within no time, you get a confirmation of the transaction & payment being done along with a receipt. At the backend, we are unaware, but to make this seemingly simple transaction possible, the terminal, a credit card network, and at least two banks are involved, all through a complex network of API calls.

Role of technology in the paradigm shift towards API Adoption

APIs are a two decade old concept in computer programming, and they have become an essential part of developer’s toolsets for years with OS level APIs, system level APIs etc. With the rise of networking and internet, many public or open APIs are also available to consume to mix and match functionality from different vendors. Below is a quick list of widely used public APIs

Google API, Twitter API, Facebook API

Programming languages like Java provides an API library of software components available “out of the box” to anyone who has installed the JDK (Java Development Kit). These components implement common tasks and generally increase produc- tivity because programmers do not have to start from scratch every time. One of the basic components used in software is something called a List, which, as you might expect, keeps track of a list of items. The Java API defines what you can do with a List: add items, sort the list, determine if an item is in the list, etc. It also specifies how to perform those actions. To sort the List, you need to specify how you want the List sorted: alphabetically, numerically descending, brightest to dullest color, etc.

With the rise of the web-services, which is basically defined using set of specifications to define the API, web-services can be defined using Web Services Description Language (WSDL), an XML variant. In the early days of web-services API, designed to communicate using SOAP (Simple Object Access Protocol), a messaging protocol that sends XML documents over HTTP(s). But at the time of writing this paper, most web-based APIs use REST – Representational State Transfer – as an architectural style.

At its core, in a REST API, a state of a resource is represented at any point of time. The resource could be any business entity or group of entities like users of the system, list of payment transactions, and credit history. These resources are uniquely identified by using resource identifier or index. In web-services API, these resource identifiers are represented as URL (Universal Resource Locator). For example, https://developer.paypal.com/api/payments/v1/payment

The above PayPal API will list the payment resource to its consumers. The above API can be invoked using standard HTTP Operation Method (default is GET). These HTTP methods can create, list, modify and delete (CRUD) operations on the resource in contention. Using these REST API, the state of the resource can be represented using application format that can be consumed e.g. JSON, XML or Binary data. The REST APIs have given a lot of flexibility to application architects and designers to create applications where parts of the systems are loosely coupled with the API contract, and consumer of the API can process the API response (e.g. JSON) in any way they like. This has led to new way of architecting the application in a Service Orientated Architecture (SOA) and recently towards microservices and nano-services.

Microservices basically represent a group of related APIs covering a specific business entity or context. These microservi- cescollaborate and make a business flow or use case. The microservices architecture (MSA) provides a modernized approach to realize application for any industry including the payments. It is an architectural style, in which a large application is built as a group of small and independent modular services, as opposed to one big fat monolithic application.

The philosophy of the microservices architecture is: “Do one thing and do it well." Each service is independent unit of work focused on one specific task which can be independently developed, deployed, and scaled in a technology agnostic way. These services collaborate or communicate with each other through each other’s APIs (mostly REST web service APIs). Each service can be implemented using any programming language, database, and software environment in an agile software development methodology. Each service follows its own DevOps process with dedicated CI/CD pipelines using tools like Jenkins.

Microservices architecture enables each service to be scaled, elastic, resilient, minimal and complete. Each service can be run as a container, which is a running unit of service which can be created and destroyed at will as per the incoming traffic and load. These containers can be run anywhere e.g. on desktop, virtual machine or on cloud infrastructure which supports container run time e.g. Docker. For Container orchestration and management, there are platform like Kubernetes and OpenShift which does the collaboration of micro-services (in form of container) using service discovery and registration. With the adaption of these modernized architectures and supporting tools and platforms, it’s very easy to build cloud-native application which can be easily deployed to any cloud, whether private, public or hybrid. Eachcloud provider also has their custom service of Kubenetes integrations, which can help to deploy cloud native application their platforms.

The ability to scale up and down of these containers on an IaaS (e.g. AWS) or PaaS (e.g. openshift) model can be cost effective, as cloud typically works on PPU model (Pay Per Use). It’s evident that IT can have a big role in driving a complete revamp of the legacy API to amicroservices based modernized architecture, which is fault tolerant and resilient. This will help organizations to generate revenue, cut operations costs, and better engage customers with new features and services, in shorter spans of time.