FinTech has changed end users’ banking experience substantially over the last five to seven years. Digital banking has existed for a long time, but it has now leapfrogged with the growth of API Banking in a short period.
Companies started developing Open Source APIs, or Open APIs, to reduce their lead time in integrating with third-party partners. APIs were created like an instruction manual that allows an application to communicate with it and be understood. Open APIs assumed significance due to standardization guidelines introduced by directives such as PSD2 in the EU and real-time P2P guidelines like UPI in India. Over the last few years, it has become an effective model to grow inorganically through ecosystem partnerships and even generate revenue out of new business models.
The early banking model had banks as the biggest customers for technology integration services, as their BAU operations involved working with multiple third parties with different technologies. Open APIs turned this model around. With Open APIs, banks are now fast becoming the integrated service providers themselves to third parties. |
