Because the data network connects with all financial institutions, the fintech app doesn’t have to. With open financial APIs, there is typically a data network involved that acts as an “API connector” between fintech apps and financial institutions. These data connections allow third parties to carry out functions such as account balance checks, transaction history lookups, account and routing number verification, and more. When they do this, they give restricted access in order to keep customer data secure and ensure that it’s accessed only with their customers’ permission. With financial APIs, banks build dedicated endpoints to enable third-party institutions-such as app developers or data networks-to access consumer-permissioned data. That’s why Plaid only shares consumers’ data with their permission and employs security practices that meet or exceed industry standards. With open APIs, security and privacy are top concerns for third parties, banks, and consumers. By enabling banking customers to safely share information such as their account and routing numbers, balances, and transactions history, open APIs enable the creation of helpful financial apps and services. Unlike partner APIs, open APIs make financial data available to multiple third-party service providers, rather than just one. Partner APIs benefit banks by creating better services for their customers, and benefit third parties by enabling them to create products and services with secure financial data from banks. Examples of third-party partners include Jack Henry and Q2. Usually, the third party helps the bank create a new product or service, such as a personal financial management tool or a faster way to process loan applications. These APIs often serve as the connection between a third-party partner and a bank. Partner APIs create a data connection between two organizations. These APIs promote internal collaboration, save money through automation, and facilitate safe data exchange between internal groups. Internal APIsĪlso known as private APIs, internal APIs are used inside of organizations (in this case, a financial institution) to improve efficiency, develop products, and more safely manage data. Within the financial services and banking industries, there are three common types of financial APIs. → Need a financial API solution? Core Exchange enables financial institutions to quickly execute Financial Data Exchange (FDX) APIs they can use to connect with Plaid, other aggregators, and organizations. These financial APIs open up a new realm of financial access by enabling new apps and services to be built using safe and secure connections to financial account data.Įxamples of financial services built with financial APIs include a peer-to-peer lending marketplace, a used-car payments platform, and an industry-leading rewards platform-the possibilities are endless.įor this article, we’ll focus on APIs that connect financial accounts to financial apps and services. Examples include Yahoo Finance API and Alpha Vantage.Īnother kind of financial API, often referred to as “banking APIs” or “open banking APIs” helps people connect their bank accounts to financial services. Brokerage APIs are used to gather data on the stock and cryptocurrency markets to help investors gain insights and make faster, better-informed trading decisions. In the financial world, there are different kinds of APIs. The site is not only connecting disparate data but making it readable and useful to you in real time. When you enter your search parameters, the site uses its API connections to a wide variety of hotels, airlines, and car rental companies to aggregate the most useful information based on your search and connects you for booking. ![]() The data needs to be useful and readable to a user.Ĭonsider travel websites like Hotwire, Expedia, and Kayak. ![]() Of course, there is more to APIs than connecting disparate systems. ![]() That way, you can see what invoices have been paid from within the shipping software, then decide when to ship goods based on that information. APIs connect and share data between disparate software systems, allowing otherwise siloed data to be used across applications.įor example, if your business has software for tracking invoices and separate software for shipping products, an API could connect the two systems. API stands for application programming interface.
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