Application programming interfaces (APIs) are a set of subroutine definitions, communication protocols, and tools used for building software. In simpler terms, APIs are what allows one product or service to communicate with other products and services.
Industries all over the world are starting to take advantage of the many benefits that APIs have to offer, and the financial industry is no different. Some of these benefits include increased efficiency and increased customer engagement. Although many industries use APIs, it could be argued that they have had more influence on the financial industry than any other. In this article, I will discuss the three biggest influences that APIs have on the financial industry.
Makes Stock Trading Easier
APIs allow for easy stock trading as they provide real-time pricing data and allow for customized portfolios with personal preferences. For example, if you are the owner of a stock and want to sell it when it reaches a certain price, you can set up an API to do just that. The opposite of this is true as well. If you want to buy a stock when its price point drops to a certain point, you can automatically program your API to purchase it if and when that happens.
In the past, if you wanted to buy or sell a stock, you had to call your broker and have them do it for you. The broker would then have to make calls and find someone that is willing to buy or sell. APIs eliminate the need for this by searching the databases and automatically connecting you to a buyer or seller. Once you are connected, the transaction is made through the API.
Improves Data Security For Banks
Having top notch data security is the number one priority for every financial institution. This is because hackers are constantly trying to steal other people’s finances and personal information on a daily basis. However, there is no financial institution that relies on having elite data security more heavily than banks. If a bank does not have great data security, then consumers are not going to want to entrust their money with them.
Luckily, APIs make it very easy for banks to provide top notch security for their customers. One way in which they do this is by requiring extra verification steps in order to use their services. For example, when you use an ATM, you need to enter a pin number in order to take money out of your account. After you type in your pin number, the bank verifies your identity immediately, and allows you take out your money within seconds. The ATM is able to verify your identity so quickly because of APIs.
Improves Customer Satisfaction
The third and final major influence that APIs have on the financial industry is that they improve customer satisfaction. APIs improve customer satisfaction because they make it very easy for consumers to use your services, and provide your employees with easy access to accurate information. For example, let’s say a consumer purchases an item from your online store that requires it to be delivered to their doorstep. Often times, they may wonder what the status of their delivery is, and will call one of your customer service representatives to find out.
However, implementing a shipping API onto your webpage allows the customer to find out this information on their own as opposed to calling a customer service representative. If the customer still opts to call a customer service representative for any reason, APIs will allow them to accurately provide this information to the customer in a manner of seconds. Anytime you are able to provide your consumers with fast and accurate information, you will increase their satisfaction, and APIs do just that.
In summary, APIs are changing the world in which we live in, and the finance industry is no exception. APIs are improving the way in which we trade stocks, and purchase goods and/or services. Both of these influences result in an increase in overall customer satisfaction. There are many different influences that APIs have on the financial industry, but the three I wrote about in this article are the most influential.