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What Is Open API and What Is It Used For?

What Is Open API and What Is It Used For?

February 28, 2022

Although Application Programming Interface (API) helps developers simplify the integration of multiple software programs, not all businesses make them accessible for a better customer experience. This is why Open API is so beneficial for a financial institution. It helps developers make different programs work together seamlessly and provides standards for how software programs can communicate with each other. What is Open API in financial services, and what is it used cases example in open banking use cases?

What is an open API?

Open API, or public API, is a fintech API that uses a common language or structure to enable universal access. It allows developers to use a particular software product in various ways to make payments. In short,  open API allows third-party developers to build web services and software applications for personal finance management, know your credit history through open banking API. However, an open API in online banking differs from an open-source software product. The word “open” in Open API refers to its characteristic that is openly shared and open to public use.

How is an open API different from a closed API?

What makes an Open API different from a closed one? While the Open API is accessible to anyone with the internet, a closed API can only be used by the developer or the company that created it. Open API allows the developers free access to it with terms and conditions applied.

Since it gives companies universal access to software programs, Open API is the best option for businesses to adopted open banking that integrates the software tools they use daily with multiple software verification. Developers can use the API to access some software program features without taking the time to develop a group of code.

How does an open API work?

To understand how Open API works in financial data, you need to think that API is an agreement between two parties. The API will outline what details and features can be requested, how to make that request, and ensure it all happens smoothly for the user experience.

Google is one of many companies who have implemented Open API. Through YouTube API, Google allows developers to integrate YouTube into their softwares or applications. YouTube API enables them to search for videos, see related content, and retrieve standard fees.

Why should your companies adopt an open API?

Since it encourages competition and creates room for new and innovative banking products and services in fintechs, Open APIs are mostly accepted for open banking account aggregation. However, it does not only benefit banking and fintech companies. Instead, Open API has become a modern way to address compliance obligations and a new way of conducting business.

What is open API used for?

API open banking allows streamlined operation by reducing the number of issues with technical proficiency necessities such as psd2, wealth management problems, and many more. With collaboration and integration, companies can use omnichannel platforms to operate multiple disparate services. In other words, your bank's operation will be more efficient and low in cost.

Your company will gain a better view of your customers with information allocation that other third-party platforms have provided through subscription in open banking APIs. With the identification, your business can provide the best program the customers need for the current innovation in the banking industry.

Should your business need Open API to grow more efficiently and effectively? It is a question for you as a business owner. However, implementing Open API and its benefits is the way to ensure your business' growth through innovatively new services.