At BBVA, we recognize the significance of these solutions and are advancing parts of our strategy to stay one step ahead in meeting future demands.
By Horacio Ballestrin, Head of Product, Channels & Innovation at BBVA Spark, along with Ana Climente, Head of Open Banking at BBVA Spain.
In today’s digital age, Application Programming Interfaces (APIs) are at the epicenter of a revolutionary transformation in the financial sector, particularly in the realm of banking. They are reshaping the way we understand finance, ushering in a revolution that opens doors to a world of collaboration and opportunities, creating value for customers and spawning new business models. At BBVA, we are aware of this and have been working towards their development and implementation of new solutions, some of which are already part of our strategy.
Why are APIs so crucial? These interfaces serve as links between different originating systems, enabling the sharing of banking information and conducting operations securely without the need for extensive developments. Furthermore, APIs, whether private or open, regulatory or market-driven, facilitate integration and collaboration among diverse platforms (both across industries and within companies), making interconnection seamless and reliable.
The significance of API calls, a primary indicator of the volume these transactions handle, is such that it is expected to grow at an average compound annual growth rate (CAGR) of 35% by 2030, according to various sources (see graph).
In a banking landscape that grows more diverse each day through interactions with more companies, payment platforms, and the need to adapt to the advancements in the fintech world, APIs are the direct channel enabling users to have the speed and security in managing their treasury and operations that they demand daily.
It’s also important to note that while the dynamics of sharing information and conducting operations through APIs are associated with the fintech world, their benefits extend to all types of users, both businesses and end consumers, and especially for banks. This technology facilitates embedding financial services into third-party platforms and remote data integration, driving new lines of business and enhancing internal processes.
At BBVA, we have been expanding APIs beyond local environments for several years, bringing the most demanded banking services to this new channel. Now, our focus is on evolving our offering according to the demands of our clients and co-creating new products and APIs to address their needs.
Looking into the future
When financial institutions open their APIs, they provide those who interact with them with the opportunity to connect more efficiently. This offers their clients, whether individuals or businesses, more dynamic services such as automated payments, real-time ownership verification and collections with notifications, or bank account aggregation, among others.
Furthermore, users can precisely track the company’s movements across different accounts from different banks (from payments to receipts, including international payments or investment integration). All of this simplifies financial management, making it more efficient, and thus enhancing the productivity of those responsible for reconciling and managing accounts on a daily basis.
With all this in mind, when we analyze the role of APIs in today’s financial world, we detect five relevant competitive advantages for both business and user experience (UX):
- Enhancing UX and maximizing service performance: When banks open their APIs, they not only allow third parties access but also create a new communication channel with their users and end-to-end experiences. This enables offering contextualized financial services where and when the customer needs them, simplifying operations.
- Streamlining onboarding and validating in real-time: Avoiding trips to the branch for banking procedures is one of the great advantages that the pandemic has brought. This is possible thanks to banking digitalization and API interactions, which allow acquiring new products with increasing security while reducing the risk of fraud in enrollment and payment processes.
- Streamlining bank account management: With shared APIs, the bank can offer consumers the possibility to view all their information on a single screen and optimize decision-making. This can be done in real-time, especially during stock market operating hours for individuals, or to make real-time payments or transfers for businesses.
- Generating more business opportunities: As mentioned, connections through APIs generate internal efficiency and also provide the possibility to turn those processes into marketable products (for example, enabling automatic bank reconciliation or the ability to make automated payments, etc.). It also allows designing new, more complex solutions, such as digital wallets that accept various online payment operations without the need for a physical card.
- Expanding offerings to new markets: When a bank has the potential to integrate its APIs with those of other companies, the possibilities multiply for all actors, both from a corporate perspective and among users. It even opens the door to creating virtuous alliances for the development of new solutions or products.
In summary, integrating financial services through APIs provides flexibility and adaptability to the bank’s existing infrastructure and allows offering more personalized services without the need for extensive internal development or extraordinary investments by clients.
At BBVA Spark, we see a wide range of possibilities in integrating existing APIs… and those that are on the way. The boundaries begin to blur, especially for users who will see their portfolio of services grow every day and how this facilitates financial management in a dynamic world that demands quick decision-making.
