APIs pave the way for the rise of FinTech Alt Banks
In the continuing evolution of financial services, neobanks have experienced tremendous growth, offering products and services that aim to be downright competitive and more attractive than what is offered by traditional financial institutions (FIs).
It is the Application Programming Interface (API) that enables these digital newbies to tackle existing systems and vendors.
In a broader context, APIs help FinTechs design and integrate digital functionality that spans a multitude of banking and payment functionality directly into platforms and applications.
The result has been an unbundling of financial services, where companies can focus on specific niches and demographics, with go-to-market strategies that emphasize speed and agility. There’s also a lower cost structure, as neobanks and digitally-driven businesses don’t need to build a dedicated infrastructure (or hire additional compliance or development staff) to deploy and execute these offerings. .
As PYMNTS noted, payments are quickly becoming a must-have feature for businesses, especially as they seek to broaden the appeal of their applications.
Integrated finance is gaining ground
Within the bank, we are witnessing the evolution of what we could call “embedded finance” – where, theoretically, any business can come into the market with a menu of Ã la carte banking options. The ultimate goal would be to create an ecosystem that keeps users ‘in-house’, so to speak, as they go about their day-to-day financial lives, meeting specific needs in an online way only.
In one example, the green banking start-up Aspiration helps customers use products and services to pay bills or make purchases. – plant trees for every transaction instead of offering more traditional rewards such as cash backs, discounts or travel benefits – and aims to introduce credit cards with features aimed at combating climate change.
See also: The aspiration of a green banking start-up linked to PSPC relies on conscientious consumer demand
In recent days, we have gained visibility on the challenger strategy and on growth, which can be a positive ripple effect.
The expansion of personal finance company SoFi beyond student loans generated 35% revenue growth. Net income from the lending segment increased 21% on an adjusted basis to $ 210 million, while income from financial services nearly quadrupled to $ 3.2 million. The company said consumers continue to tap into its SoFi Money app and offerings.
Read more: SoFi Offers More Financing and Lending Options in Q3
And in an interview published Thursday, November 11, David Dindi, CEO of FinTech Atomic – which focuses on enabling integrated retail investing – said he believed unbundled services would become the new model. Atomic enables corporate clients to integrate a wide range of investment products and services, including direct indexing, ethical investing and currency trading in 60 markets.
More Details: Atomic Launches APIs to Enable FinTech Investment Products
APIs allow non-banks and FinTechs who want to deliver banking experiences to change the way – and even to whom – financial services are delivered.