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The API Economy in Finance: Payoffs of Getting Connected

The API economy can enable a business or organization to transform into a platform.

Visual by Israel Palacio on Unsplash

What is the API economy?

  • You can be an API producer like Stripe and rent out your APIs for a price.
  • You can be an API consumer and use tech from others to build your own product, akin to building with LEGO bricks.

How big is the API banking economy?

  • SoFi used to specialize in student loan refinancing. Now they also have investing tools, insurance products, checking and savings accounts, and most recently a cashback credit card. Pretty close to a standard bank.
  • Atom Bank recently added a collection of mortgage, personal, and business lending products to its portfolio to secure a bigger market share with maturing Millennial audiences.
  • Cash App went from a Venmo competitor to an early-stage digital-only bank, offering access to no-fee checking accounts, debit cards, and crypto investing.

APIs Build Trust, Commerce, and Connection — In Any Direction

  • Banking as a platform — You can augment your customer product portfolio via partners’ financial APIs to move into new product verticals, expand into new markets, or re-engage customers with upsells and cross-sells. This route works well for banks with an established customer base who want to retain consumers as well as for challenger banks looking to grow fast.
  • Banking as a Service (BaaS) — You can distribute some of your core financial services as APIs for others to consume. Payments, loan underwriting, savings, and credit products are just several of the things you can offer via an API. This option works best for digitally mature banks with a modular technical architecture and strong operational processes.
  • Better internal system integrations. Using APIs, you can retrieve and combine data assets and functionality from different systems. Then you can “paste” these assets and functionality into other systems to ensure interoperability (even if the systems were never meant to work together by design). That’s a big issue, in fact. According to MuleSoft’s 2021 Connectivity Report, IT teams spend over a third of their time on integration projects. Subsequently, custom integrations cost large enterprises an average of $3.5 million in annual labor costs.
  • Reusability. Built once and invoked countless times, APIs allow you to combine and rehash data and functionality for endless use cases at almost no extra cost per use. As a result, labor costs go down while staff productivity increases.
  • Shift to demand-side thinking. Traditionally, financial companies were focused on supplying as many customers as possible with available services. The API economy enabled companies from other domains to build a scalable digital asset once and then amass demand for it. As a net producer, you can attract extra revenue by extending your financial services API to new parties: retailers, restaurateurs, auto manufacturers — anyone dealing with money, really. As an API consumer, you can quickly jump on emerging market opportunities to retain a competitive position.

Who’s Cashing In? API Economy Examples in Finance

  • Wise has a popular B2B and B2C product — virtual bank accounts with low-cost cross-border money transfers.
  • They also have a BaaS partnership vector — renting out their APIs to digital-first banks, FinTechs, ecommerce companies, and other financial players including N26, Monzo, and Bunq.
  • Implemented a host of embedded finance solutions for the education, energy, government, and insurance sectors to streamline KYC and payments
  • Digitized the pension withdrawal process for the locals so that Singaporeans can withdraw their pensions in a couple of hours instead of five to ten days
  • Helped a vending machine provider add cashless payment options
  • Provided a payment API to a parking company for streamlining parking payments
  • KYC and identity verification
  • Full banking accounts and sub-accounts
  • Branded payment cards
  • Digital consumer loans
  • A crypto custody solution
  • And more
  • AccessFintech on improving transparency in trading
  • BillDesk to improve statutory and utility payments for Indian customers
  • Thought Machine for rapidly entering the UK market

Banking APIs: Perils and Payoffs

  • What types of internal APIs can we fetch to improve connectivity between different banking products?
  • Could an API abstraction layer help connect disparate systems?
  • Which services can we distribute externally to attract extra revenue?
  • Who is going to be in charge of building those integrations — internal teams or a competent integration technology partner?



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Anna Oleksyuk

FinTech Enthusiast at, looking beyond the hype in the adoption of the new technologies.