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We Need Real-Time APIs

The API economy is great – it’s helping businesses connect and collaborate like never before, and helping small disruptive companies punch above their weight by solving simple problems that established businesses aren’t able to address. There’s a problem though: APIs are being held back by old-school financial infrastructures that can’t keep up with the speed that we expect as modern consumers.

We’re living in a world of instant transactions, but many API-enabled applications and servers can take up to three days for transaction data to come through. This is completely at odds with real-time financial management and can feel frustrating if you’re a consumer using a modern service for it to feel like your high-street bank in 1999 suddenly. I believe it was the CEO of Kantox that said very astutely that “The megatrend in financial services is neither FinTech nor blockchain, but the shift from batch to real-time.”

As we see an increasingly global approach to financial and data management, we’ll see an increased demand for real-time information sharing between platforms and services in different countries – companies like TransferWise are rightly focusing on this as a priority, offering real-time integration for their banking API partners.

Offering real-time data can genuinely be a more significant innovation in the world of finance than blockchain – reducing friction between retailers, banks, and consumers. Real-time data will enable companies (and consumers) to interact using accurate, live data and make better-informed decisions about financial management and services. This could be `as simple as someone avoiding an impulse purchase because they’re aware of their actual bank balance or as complex as a protecting a customer from fraud using accurate, real-time information from multiple data sources.

Real-time APIs will also allow financial services companies to effectively introduce new products that are being held back by our old fashioned infrastructure. Notifications about low balances based on predictive analytics on your current account or real-time transfer of payments between peers are just a handful of examples. Real-time digital receipts showing you exactly the items you bought, how much tax you paid, and where you can return those items are other examples.

Financial decisions are often made on impulse; we check our bank accounts before purchasing a pair of shoes or item of clothing. If someone’s bank balance hasn’t updated due to a slow transaction, we might only find out that we had less to spend than we thought after the purchase is made, which means the information we use to make a decision is redundant by the time it’s updated. This can be frustrating on a personal level (we might have to return something we wanted), and potentially be disastrous for businesses making financial decisions using what appears to be real-time data on financial services platforms.

Real-time APIs will offer more financial empowerment, improve trust between financial services providers, and their customers, and help consumers and companies stay on top of their finances with greater ease. We have seen Indian payment system UPI’s success story that is also one such API. By empowering our customers and partners to make better financial decisions, we can increase the level of trust, and ensure that our platforms and offerings become trusted parts of their financial lives.

Since 2013, MEDICI has been a proponent of APIs. Check MEDICI’s early articles on APIs here: 41 APIs making waves in FinTech, or other MEDICI articles on APIs.

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