Analysis

How Fintech Exploits Data to Improve Payments

There are more and more companies offering financial tools and platforms that enable programmers to create innovative services and new business models.

The fintech continues to be the sector of reference when it comes to new business ventures (in particular for the level of investment of venture capital funds), programmers and developers have the ability to use the API, the acronym of Application Programming Interface, are pieces of code that simplify the dialogue between one application and another avoiding useless code replicas. The APIs within large companies are starting to acquire an ever-increasing strategic importance, especially with a view to digital transformation.

Through the use of the API you can automate some steps and allow programmers to avoid rewriting pieces of code. Even within the banking sector, APIs are often referred to as the perfect tool to generate new business channels. One of the most famous examples is certainly Stripe, a British startup that has developed an API that is already used by some of the most important technological giants such as Kickstarter, Apple, Twitter or Pinterest. The Cupertino company has relied on this API to develop its solution for Apple Pay payments. Imagine it as a third-party payment processor based on a very simple concept: helping companies manage their online business.

The service they offer allows you to make online and mobile transactions that not only provide a high level of security by not storing buyer data on the suppliers’ servers, but also provides programmers with easy-to-implement tools. In addition, Stripe uses an automatic algorithm that identifies and reports fraudulent transactions. We can safely say that now Stripe is an established player in the online payment industry.

The fintech sector is not only represented by payments, we often hear it say “Data is the new oil” and the APIs in the financial field represent another way through which it is possible to create new business channels. Xignite provides APIs for storing and analyzing cloud-based financial market data to help emerging businesses and established businesses deliver real-time market data and support their digital assets: Web sites and apps .

Currently, Xignite is one of the pioneer companies for an API that can feed databases in real time. Using the various APIs provided by Xignite, any developer can easily provide aggregation of financial data from a variety of sources. In this way, it is possible in combination with the data of the individual transactions, to increase the capacity of the financial instruments offered almost without limits.

In addition to Xignite, it is also important to mention Kontomatik. With the user’s consent, the Kontomatik API receives information from the user’s bank accounts and can be used for different purposes: adding information, obtaining information about the client’s situation or keeping the levels of risk or exposure under control . Data collected through the API is stored on the Kontomatik servers for 24 hours before being deleted, without the need to register a password and thus ensuring that data can be reused much more quickly.

Kontomatik supports hardware tokens, SMS codes, “disposable” passwords, “captcha” systems and other authentication methods. To access the API, you need to implement a two-factor authentication or strong authentication system.

Obviously, even the big traditional players of finance are moving to keep up with the times. The technology behind the API is not an innovation in recent years, but its widespread use in the financial sector and some recent regulations that favor their use, as in the case of the PSD2, entered into force in January 2018 promise to change the face of the sector banking and finance.

One of the great players that has moved is surely MasterCard, which is trying to establish itself in the world of application development by offering different tools in which it mixes both business opportunities. MasterCard has launched new API platforms dedicated to financial institutions, businesses and digital solution providers that provide the tools needed to enable payments on new platforms.

But the banking giant BBVA and the small Italian Banca Sella have launched platforms to allow developers to use their APIs, create new ones or create new financial solutions thanks to their platforms. The BBVA platform is called BBVA API Market, that of Banca Sella is called platfr.io.

Probably in the course of 2018 we will see other initiatives in the field of API and open banking also in Italy. This is one of the opportunities for banks to partially retain their market shares and still have an important role in the digital economy in the coming years. While fintech companies create new relationships with customers, banks will offer their consolidated infrastructure so as to allow innovation to be not only simple to implement, but above all secure.

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