In an increasingly competitive finance sector, companies must provide innovative services with good customer experience at an affordable price to remain competitive. We now expect speed as an essential element when deciding on purchasing and the finance industry is also having to meet this requirement for customers. Services like an instant loan or insurance policy require integrating different data sets to determine the eligibility of a potential customer for a product. This has pushed the industry towards a data-driven approach, by building data partnerships and application program interface (API). While businesses combine several cognitive technologies to enable this change; at the heart of this transformative journey is the API technology
API secure pathways for different programs, interacting with the data, enables financial service companies to provide controlled access to their partners. Whether a company needs to facilitate customer transactions, extend eCommerce platforms for partners, or standardize numerous products and services in dozens of countries, an API can make it easier for businesses to interact with their target audience. Using these data banks, insurance, and digital payment businesses can build innovative products that were otherwise not possible.
However, to create maximum value through APIs, building technology for API enablement and creating policies to regulate secure data interactions are crucial.
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Leveraging APIs with AI and Machine Learning Technology
As the economies are becoming dynamic, the risk of non-payment and investments are highly threatening the finance sector. Financial firms are building AI programs that can predict the risk of an investment based on historic data. These historical data can be driven from an API for live monitoring and can predict the loss live before it occurs.
Regulating Security Protocols to Build Trust
In the financial service industry, trust is associated with how robust the security protocols and policies are. Apart from cutting edge technology, a data partnership requires companies’ security integration and its policies. Robust authentication systems and clearly defined access levels are crucial for building trust between businesses.
Creating New Revenue Streams
The traditional businesses of many banks have been facing slow growth, which has pushed banks to identify new revenue streams. In this attempt, banks are partnering with insurance companies, genetic and are building new products to make the customer banking experience better. The API is facilitating these innovations by creating a secure data interface for their partner’s app, web platform or software. Besides, banks are combining artificial intelligence and machine learning with APIs to identify investment risks or risk of defaulting based on the customer’s data or their profile.
Today, customers have become vastly more tech-savvy and technology has become part of their daily life. The new-age customers are open to new companies that offer better products, services, and experience. As customers are moving towards traditional banks to modern fintech, the competition is empowering consumers and inspiring traditional companies to change their approach.
The traditional banks that offer insurance services or the stand-alone insurance companies are fighting competition with new-age data-driven companies.
Hugo a web platform that issues instant, personalized insurance is one of the great examples of this. Based on the health risk profile of customers, Hugo delivers end-to-end digital insurance experience.
The financial services industry is seen disruption in the traditional approach and in technology, which is driving the finance sector to a new age. This has attracted new competitors such as fintech firms, challenger banks and neo-banks that use technology to challenge traditional business models and practices. Thriving in an API economy is key to unlocking new sources of business value for the financial service industry across the globe.
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