Benefits of API for Open Banking Transactions

Benefits of API for Open Banking TransactionsBank account API (Application Programming Interface) is a feature that is currently being standardized by the banking sector. The Application Programming Interface makes it easier for banks and customers to conduct open banking transactions by involving third parties by implementing APIs. The following will explain further what an Application Programming Interface (API) is and the benefits of the open banking API.      

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What are APIs?  

An Application Programming Interface (API) is a feature or program that is capable of connecting software platforms to transmit data. API can provide data services in various fields, one of which is banking. The presence of the Application programming interface or abbreviated as API makes it easier for banks to process open banking transactions, by connecting banks with fintech (financial technology) companies. The following will explain in more detail the function of the API, especially in the banking world.      

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Benefits of API (Application Programming Interface)  API (Application Programming Interface) allows banks and fintechs to send and open the data and financial information related to payment transactions from bank customers using the principle of equality or reciprocity. This means that there are third parties who will take part in the implementation of the API, namely customers themselves as data owners, banks, and fintech companies. The benefits of the Application Programming Interface (API) in general are as follows;          

• To develop customer products with a financial API that is easily connected to the user's fintech account. One Application Programming interface can be used for all users' financial data.            
• Making it easier for customers to do business, managing one's personal finances can improve the user's financial condition through a collection of financial data and user expense information. Therefore, it can encourage users to save, check balances through the application, help manage debt, and understand users' investment goals              
• The API in digital finance offers financial data from various institutions in real-time, accurate and safe which is presented in one Application Programming interface.              
• The API helps users to make the best products for their use. So users don't have to worry about infrastructure management.          

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The security of this API is guaranteed because it is fully certified by KOMINFO as one of the best electronic system providers and fulfills ISO (27001). It can guarantee the implementation of data and information system security management that is adjusted to the regulations and provisions of data privacy and security regulations that apply both locally and internationally. Currently, there are more than 200 companies in Indonesia that support and use the bank account API (Application Programming Interface) to process digital banking transactions, which are essentially open banking.                    

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On the other hand, the COVID-19 pandemic has caused transactions and payments in Indonesia to switch to a digital system, thereby increasing the use of APIs in banking. Currently, the banking sector is implementing an open API through 3 principles or slogans, namely sign up, sandboxing, and start your business where these are shortened to 3S. This feature can reach all companies or segments of the digital business industry as well as digital MSMEs or small and medium-sized businesses to prepare for digital implementation.      

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That is an explanation of the meaning of the Application Programming Interface and some benefits of API in general and specifically in the banking sector. Bank account API is being standardized by banks and is planned to be implemented as soon as possible. This system was developed to realize the vision of a payment system in the next few years. ***