Application Programming Interfaces (APIs) have opened the door for thousands of new financial web apps people use daily. Think of APIs as the middleman that will ensure the direct exchange of data across multiple applications.
Financial APIs are used by most fintech companies, helping to create secure connections between financial apps that monitor people’s financial health and their bank accounts. Good financial health means having enough money to cover daily expenses and savings to face unexpected future events.
Below, we’ll explore how people can improve financial wellness using API technology. Let’s dive in!
1. Budgeting and set financial goal
People who plan for the future are often seen as ready for anything. This includes those who plan for their finances, such as making budgets, transferring money to saving products, etc. People like these show better financial health since good financial planning habits are essential to access better opportunities and lead a comfortable financial life.
APIs technology can connect bank account apps to help you set up a budget and stay on track. Many digital banking apps can be used to automatically budget, save, and invest for the users. With your budget, you shouldn't just plan for your next spending but also check and take a close look at where you already spent. Knowing this will help you improve financial wellness, as you will stick to your budget if you start making more money.
2. Saving and investing to improve financial wellness
You never know what will happen in the future. That’s why saving and investing for a rainy day (and for retirement) are one easy way to improve financial wellness in the long term. Start saving for your retirement as early as possible. Using fintech apps, you can connect and control your financial accounts, from making transfers into savings accounts, and purchasing investments, to planning and executing retirement goals.
3. Paying bills on time to improve financial situation
Having healthy finances can be shown by being able to pay your bills on time. However, there are always factors as to why you are late in paying the bills. One of them is simply forgetting to do so. That’s why some fintech apps utilize API-connected bank account data to help people pay bills on time. From utility bills to loans, APIs can help build credit scores to improve financial wellness.
According to a study done by CFSI (Center for Financial Services Innovation), individuals with an excellent credit score, who are considered to be virtually risk-free customers by lenders or creditors, tend to have better financial wellness.
4. Getting out of debt for your financial well-being
Loans or debts are burdening many financially coping people. Repayments can stretch their monthly budget, be it credit cards or other high-interest debts. Sometimes, it can extend beyond a comfortable limit. This is why reducing or eliminating debts as soon as possible can free up money that you can use for many things, such as emergency fund, investments, or some improvements for your house.
Using APIs to connect with financial accounts and credit cards, fintech tools can generate a plan to pay off debts, provide valuable insights into existing debt obligations, and even automate the plan’s execution.
5. Providing access to necessary loans
Many property owners will say that good debt creates wealth. However, not every financially coping individual can have access to favorable loans. Instead, these people often pay the highest interest rates. Lenders can utilize API-based fintech tools to properly issue necessary loans based on one’s actual creditworthiness, using cash-flow data such as spending and saving.
Due to the growth of APIs across the financial sector, traditional banks will start relying on APIs to create new apps and services. Many available fintech apps can help people improve financial wellness as well. Businesses that want to utilize APIs should work with a trustworthy open banking service provider like Ayoconnect.
Ayoconnect has connected 1,000+ companies in Indonesia to a centralized Open API ecosystem. We also have integrated 4,000+ embedded finance and digital products with one API. Find out more about Ayoconnect here!
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