Why your company should start looking at Banking APIs.

Why Your Company Should Start Looking at Banking APIs

How do Banking APIs help a business? Are they quintessential? Let’s find out.

I’m not sure if this is how a blog should start- with a disclaimer right at the beginning. Here’s it- this blog could have a couple of hard pills to swallow for entrepreneurs & business owners. 

Even then, let me put forward this band of assurance that there will be light at the end of the tunnel- a ray of banking-API-sunshine. I know you wouldn’t be convinced yet; wondering what the blog title is all about even! 

“What are the various benefits of leveraging banking APIs? Can I do without it?”

Sure. 

According to Entrepreneur, 80% of companies make it past that first-year mark. In the 2nd year, only about two-thirds of all businesses with employees survive. The 5th year? Just half! And 30% by the 10-year mark. 

Ergo, 7 out of 10 businesses fail within the first 10 years. 

Entrepreneur

While most of us must have chanced upon the widely-spoken-about reasons for a company’s failure- like lack of marketing negligence, wrong hires, or even funding issues. Oh, not to forget the most important one- the product-market unfit that either pivots a company in the wrong direction or does so incredibly late that competition beats it out.  

A chart by Failory on why companies fail.
Source: Failory 

While these are grave problems, there is another batch of reasons many founders may not even anticipate and/or even prepare for. 

  • Legal problems with compliance issues that are harsh, especially for fintech companies, 
  • Operational problems with resource underutilization & bandwidth stretching, 
  • Tech problems where your developers burn the midnight oil for all the wrong causes, 
  • and, Finance problems either due to lack of bandwidth or avoidable expenses in the form of resources and capital that burn your runway sooner than expected. 

Let’s dive deep and take two cases: fintech companies or any business adopting the wave of embedded finance to generate more revenue with existing products & conquer new verticals. 

So, What’s the Challenge? 

We’ve spoken to business owners who’ve waited and waited, for their products to launch after a financial integration to wrap up. The expenses that come with it aren’t good news either. 

Any company, be it a startup or an enterprise, that needs to collaborate with a legacy financial institution has several hurdles to overcome on the way. The APIs & documentation aren’t readily available, and to top it all off, the existing ones are filled with errors & loopholes. While you are trying to get this over with, be ready to swing back & forth like a pendulum between different departments for approvals, compliance checks, or even a simple discussion. 

Consequently, most founders either drop this midway or settle for mediocre solutions that add more problems than it solves. Even if you are resilient enough to go live, the headaches come in the form of broken flows, and never-ending iterations.

What are Banking APIs?

API or application programming interface helps two entities to transfer data seamlessly. 

Banking APIs enable any trusted 3rd party to avail the services provided by a banking institution or enable the same for another entity. Fintechs leverage a protocol known as API banking to incorporate various offerings and facilitate the same for their customers. 

For example, if you are looking for a convenient way to process your B2B payments and manage your cash flow, API banking just might be the answer! 

A workflow showing how Banking APIs work.
How Banking APIs Work

Remember the Pay Later companies in the market like LazyPay, Bullet, and many more? That helps you get instant credit on all purchases against a specific limit based on your credit score? A fine example of buy now pay later service offered by a payments/fintech platform; or even Amazon Pay later – a financial service offered by a non-fintech company! These are just some of the many strides a business can make, thanks to API banking! 

Note: We can consider banking APIs in two ways. One is directly provided by traditional banking institutions, while the other, provided by a Banking as a Service or BaaS provider, which is an intermediary between banks and a business. 

Let’s understand how banking APIs can aid your company during the various stages of growth. 

Banking APIs For Different Growth Stages of Your Company

Let’s trace a company’s lifecycle, right from its nascent stage, with the finest example of metamorphosis! 

Cocoon: In Stealth 

Let’s imagine that your company is starting off. There’s a lot to do, and lots to achieve. Therefore, you’d probably require: 

Seamless Payment Collections 

Should payments give your business a jumble? Not if you get it right with banking APIs. Create smooth payment workflows for your customers & partners. While you make money transfers easy, you also get the opportunity to diversify the methods; why limit to simple bank transfers when you can ride the wave of UPI and QR code-backed payments? 

Simplified Reconciliation with Business BaaS

Use business banking as a service(BaaS) to perform operations such as facilitating account deposits, linking accounts & aggregating them, money transfers, fetching account statements, and analyzing the same! The manner in which your cash flow cycle gets simplified with business BaaS is quite underrated. 

Smooth User Onboarding

Even if your business doesn’t reside in a fintech or banking domain with strict guidelines for background checks for users, KYC still forms an integral part of a business cycle. While starting, it would be easier to perform this verification. However, when you scale, the need for automation is undisputed.

We say, why not set up a real-time automated workflow with API banking? Run the documents a user submits, be it a PAN card or driving license, and verify it instantly. Furthermore, perform KYB verification for your business customers to stay in compliance with Anti-money Laundering & Terrorist Financing Laws! (AML & TF).

Real-Time Transaction Reconciliation 

The time, resources, and money that businesses waste on reconciling transactions is alarming. Therefore, let’s make sure that your business isn’t one of them. With API banking, you can employ virtual accounts to trace the source of every payment via your company. Make your ledgers up to date and the bookkeeping process efficient, in real-time! 

How banking APIs help in real-time payment reconciliation using virtual accounts.

Sounds tedious? Looks exhausting? Truth be told, it is! 

A great API banking platform will help you connect with a bank partner to facilitate all of the above, without breaking a sweat, or your wallet! 

Butterfly: In Flight 

Now, let’s imagine the case where your company is earning revenue, helping more customers, and have a sturdy team to back you. 

If you have already solved the pain points we’ve mentioned in the cocoon stage, you are ahead, I mean way ahead, of most of the businesses out there. If not, no worries! It isn’t late either. Make use of banking APIs, and optimize your cash flow cycles. 

Turbocharge with Automation 

Furthermore, you can sit back to automate all those mundane tasks and pivot your team & resources for more important things. For example, automate the process of collections and disbursals, taking the rut out of it.  

Banking APIs workflow for payment collections.

Dip Toes into Embedded Finance  

Embedded finance helps your business to step into new vertical markets, without burning a lot of investment, and unlocking new opportunities for revenue. Thus, once you have your roots firm in your target market, dip toes in new sectors, explore new verticals, and build new business models. One of the finest examples would be building your own BNPL product with banking APIs. 

BNPL as an example for embedded finance.
BNPL Working

Issue Cards & Wallets

If we say that cards can help you streamline spends and earn additional revenue in the process, how does that sound? With API banking, you can launch your cards program, issue prepaid instruments to your customers, employees, partners, and enable them to make cash-free purchases. 

In addition, you earn an interchange fee as income whenever a payment is made on these physical or virtual cards!

Streamline Credit  

If you are an NBFC or fintech lender offering lending services as a core product, or as an extension by leveraging embedded finance, banking APIs will simplify the process.

  • Want to know the credit score of users before providing loans? Check! ✅
  • Want to disburse loans quickly for a great customer/partner experience? Check! ✅
  • Want to streamline & speed up the process of collections from users? Check! ✅

How can Decentro Empower Your Business?

When our Founder & CEO, Rohit, was running his previous venture Mypoolin (that got acquired by Wibmo, & later PayU), he encountered repetitive hurdles related to banking integrations. 

  • Long waiting & compliance cycles, 
  • Incomplete documentation, 
  • No sandbox to test without business approvals, 
  • Lack of a single business POC within the bank to take the final call, 

… the list went on. 

That’s how Decentro was born- to help businesses resolve the challenge of long-drawn & exhausting banking API integrations. Let’s see how! 

Launch Products 10X faster 

… and at 90% lesser overhead expenditure. Skip the pendulum play between various departments for approvals, compliance checks, and clarifications. We take care of all this so that your business can achieve faster go-to-market timelines and you can focus on what’s really important for your business. We’ve partnered with some of the notable banks & financial institutions in the country like ICICI Bank, Yes Bank, Kotak, Equitas, Equifax, and more.

Key Takeaway: Save costs, without compromising on your tech or product. Iterate your product based on market feedback, and reach product-market fit at an accelerated rate.  

Milliseconds Response Times & > 99.9% Uptime

We understand that some businesses could suffer massive losses even for a short downtime. Therefore, we wanted to do our bit to build APIs that help your developers, just as much as it helps your business. With more than 99.9% uptime, our APIs bring you response times up to a few milliseconds to make any workflow you build efficient. 

Key Takeaway: Help your developers with API solutions that aren’t cumbersome to work with; or which exhaust them to the point of burnout. Easy, clean documentation & support at standby whenever you need it. 

Multi-Bank Architecture in the Backend

 Unexpected downtimes, black swan events, or volume spikes? No worries! We’ve built a multi-bank architecture to handle any of these. If one service provider faces any glitch, we’ll re-route the operations so that your business can run uninterrupted, and there aren’t any adverse effects.  

Key Takeaway: Use tech to steer clear away from operational problems.

95% Faster Customer Onboarding

Provide a smooth customer onboarding experience to your customers with our KYC APIs. Run comprehensive background checks on your customers/partners using any national documents, and onboard them in real-time. Oh, automate the process once and for all.

Furthermore, you can directly share a KYC link to users via email, for even simpler verification. With our CKYC APIs, keep fraud in check and prevent any cyberattack before it has the chance to strike your platform. 

Key Takeaway: Don’t compromise on customer experience, especially at something like onboarding which creates the first impression. Keep compliances in check, legal complications at bay, and set up robust security for your business.  

How banking APIs help in smoother customer onboarding.
KYC Financial APIs

Plug & Play, No More Delay

Tap into various verticals using simple plug & play banking APIs. Be it business banking for accounts linking, aggregation, statement fetching, or simplifying payments, issuing your co-branded cards for any loyalty programs or benefits, optimizing lending workflows & launching your own custom BNPL product, with Decentro’s API banking platform. 

Key Takeaway: Make use of diverse modular products to meet any financial product requirement at a vantage point! 

Fintech lenders, gig economy, marketplaces, wealth managers, payment service providers are some of the many verticals who resolve their financial woes with banking APIs. For example, MoneyTap streamlining credit processes, Workflexi eliminating gig settlement delays, or KUWY enabling instant automotive loans. 

Even after integrating, our platform takes care of all upcoming fixes & iterations without any breakage on the workflows.  

Sounds like an investment you are ready to make for your business? Let’s have a quick virtual chat over a cup of coffee! hello@decentro.tech

Cheers!