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Navigating Different Types of Lending APIs

There is not a successful business operating today that does not utilize an API (application programming interface). In fact, people benefit from APIs every day. If you have done any type of mobile transaction, you’ve used one. Weather aps, Google maps, searching for a flight, or paying with PayPal, and you are an API customer. 

An API is a software super highway that connects databases and shares information. They provide a huge exchange of data which creates limitless ways to connect people and services. A lending api specifically uses this data for the process of automated identity verification. 

Lending APIs are usually used for rapid credit scoring, applying for loans, sharing credit history, and making payments, but knowing how to navigate the different types can be overwhelming. Consider some of these helpful tips regarding lending APIs. 

Plan



To integrate a lending API into any financial institution, it is best to have a clear plan set from the beginning. Since there are multiple service opportunities, focusing on just one in the beginning will mean a more gradual development in steps. Narrowing in on one domain, such as payments or finance tracking, risk can be minimized.

It is also important to understand the impact an API can have once implemented into the institution, so be sure to set clear, and realistic goals. Also be prepared for a potential growth in business with additional revenue, increased market share, or even a geographical relocation or expansion. 

Evaluate

Before acting on the overall plan for lending APIs, be certain that the institution is capable and prepared for the changes. It will be important to assess the data reserves across the organization. 

It is recommended that any financial customer conduct a data audit. This will help determine what types of customer data is currently available for use, both internally and externally. 

It is also important for the bank to evaluate the data that may help with improving fraud detection and credit scoring. 

Choose

One of the perks of utilizing lending APIs is that they can be completely customized to meet your pre-determined goals, or you can choose a more ready-made solution.

It is important to note that even the most basic of implementation of APIs will require a great deal of engineering work. It is advisable to choose a reliable consulting partner who specializes in technology in order to support the software engineering part of the project. 

Once you choose the means for project delivery that are right for your institution, the only thing left to do is prepare. 

Prepare

Be ready and willing to push the successful projects and nix the rest when they don’t work. It is important that the institution is ready to be both an early adopter of API, and a follower. 

It will be important for the organization to test theories and change lanes quickly, as it is a very competitive market. With banks developing unique sets of APIs, it may or may not turn out to be demanded by the market. 

Banks should also be willing to make the appropriate changes or upgrades to enterprise software of internal systems. If your institution is using antiquated architecture, lending APIs will be ineffective. Also be sure you verify your compliance status with applicable legislation. 

Prepare to engage in a cooperative community with third parties, allowing your financial institution to share value-added services, customer data, and increase customer retention. 

Benefit

After your financial organization has been carefully planned and executed, it is time to reap the many benefits of lending APIs. 

The decision to implement lending APIs will exponentially improve your overall operating experience for the customer. It helps to build compatibility between borrower and lender by connecting people with loans that are right for them. 

With APIs, customers have access to innovative products that they wouldn’t normally have access to. They can also be assured that their data is safe and properly retained. 

Lenders can enjoy overall process improvement with more consistent applications and less complication. There is less room for human error, therefore less staff hours and energy wasted on data collection – now it is just available for you thanks to APIs. 

Enhanced credit verification is a huge benefit to the lender and borrower alike. The lending system process is complicated, and API functionality can connect to one service which creates customized layouts and data accrual which simplifies the reporting process. 

When lending gets more complicated, such as with mortgages, APIs will connect multiple parties together for an information exchange on the back-end, which creates a seamless experience for the end user.

The best way to navigate through the different types of lending APIs, is to devise and implement a plan that will best support the growth of the financial organization and its customers’ needs

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