Concord News Now

Banks Can Partner with Fintechs Through APIs and Open Banking, says Deltec Bank-Bahamas

 Breaking News
  • No posts were found

Banks Can Partner with Fintechs Through APIs and Open Banking, says Deltec Bank-Bahamas

January 09
17:42 2020
Banks Can Partner with Fintechs Through APIs and Open Banking, says Deltec Bank-Bahamas

Deltec International Group
Deltec Bank, Bahamas, “The opportunity to use technology from other companies relieves the banks from spending money on creating their own technologies. This reduction in cost leaves more revenue for the banks to keep.”

Open banking provides fintechs with the opportunity to play a major role in the financial industry.  It could even cause banks and fintechs to form partnerships that are mutually beneficial.

Overview of Open Banking

An open banking system requires banks to make their application programming interfaces (APIs) available to third parties.  This paves the way for those third parties to get the financial information they need in order to create and offer their desired apps and services.

The main purpose of APIs is to open up a line of communication between various applications. The codes and protocols that comprise APIs dictate interactions between software. In case you aren’t aware, the use of APIs is what makes banking-as-a-service (BaaS) possible.  

There are three different types of APIs:

  • Private – Used internally for the purpose of transferring information within the bank.
  • Partner – Created for specific partners in banking.
  • Open – Available to third-parties.

So why should banks be interested in open banking? Because it allows these financial organizations to team up with fintechs, which enables fintechs to help banks improve their digital capabilities while also opening up more revenue-generating possibilities.

How Open Banking Impacts Traditional Banks

Open banking could definitely be seen as an opportunity to grow and remain competitive in the financial industry.  In fact, about 65% of bankers believe that open banking is a good thing.  

Because a typical bank is unable to meet consumer demand for high-quality digital services, using APIs to connect with fintechs will enable those banks to take advantage of the latest technology. This is likely to increase customer satisfaction and boost revenue.

Let’s take a closer look at how customers would benefit if banks and fintechs form partnerships. 

American Banker cites a U.K. survey in saying “One in three customers would like a consolidated view of all of their financial accounts, even those held at different institutions.”

Users can accomplish this by downloading and using financial apps. However, these apps may lack access to banking data.  This could be risky and might negatively affect the user’s experience.

Open banking provides a solution by giving fintechs access to data stored by financial organizations.  This is a secure way to share data with third-party providers while also meeting the needs of banking customers.

APIs will also contribute to making banking tasks and processes much easier for customers. Finextra says that APIs, “will transform the way customers apply for credit and other products, enabling individuals and businesses to share the bank transaction data seamlessly and securely online without having to fill-out paperwork, scan their data and provide information manually repeatedly.”

Furthermore, banking customers will appreciate the opportunity to choose from different types of products and services. 

Based on the benefits for consumers described above, one can conclude that open banking will help to keep customers satisfied.  But that’s not all.

According to Deltec Bank, Bahamas, “The opportunity to use technology from other companies relieves the banks from spending money on creating their own technologies.  This reduction in cost leaves more revenue for the banks to keep.”

Once connected through APIs, the possibility to increase revenue gets realized.  An external company’s technology will add tremendous value to banking services.  This will attract more new customers while also retaining current customers, further increasing net profit.

Despite the apparent advantages of partnering with fintechs through APIs, as few as 26% of bankers feel confident in their readiness for open banking.  But this can be overcome by getting assistance from fintech services in creating APIs. 

Due to advances in technology, the financial industry is changing at a fast pace.  Open banking will only move these changes along more quickly.

But banks don’t need to fear the future if they see what’s coming and do something about it.  This will require teaming up with fintechs through APIs so that banks can improve what they have to offer.

In the end, open banking will increase both revenue and customer satisfaction, which will allow banks to remain competitive and keep up with technology.

Disclaimer:  The author of this text, Robin Trehan, has an Undergraduate degree in economics, Masters in international business and finance and MBA in electronic business. Trehan is Senior VP at Deltec International www.deltecbank.com. The views, thoughts, and opinions expressed in this text are solely the views of the author, and not necessarily reflecting the views of Deltec International Group, its subsidiaries and/or employees.

About Deltec Bank

Headquartered in The Bahamas, Deltec is an independent financial services group that delivers bespoke solutions to meet clients’ unique needs. The Deltec group of companies includes Deltec Bank & Trust Limited, Deltec Fund Services Limited, and Deltec Investment Advisers Limited, Deltec Securities Ltd. and Long Cay Captive Management.

Media Contact
Company Name: Deltec International Group
Contact Person: Media Manager
Email: Send Email
Phone: 242 302 4100
Country: Bahamas
Website: https://www.deltecbank.com/