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What is APIfication and its effect on Banking & Insurance?
Application programming interfaces (APIs) enable to drive new business by offering external and internal consumers seamless engagement with a company’s data and functions. APIs expose critical parts of an application to enable better utilization of technology investments. With technical advancements, APIs are also driving digital transformation initiatives and enabling IoT devices to communicate.
What is APIfication and how it is beneficial?
APIfication is creating APIs by businesses and organizations to expose assets to internal and external groups strategically. It makes access to information much more accessible and promotes the rapid development of new capabilities. APIfication also significantly reduces the amount of rework required should you switch to a different vendor or data source.
Outsourcing the data and functionality through a standard interface helps in providing excellent services, making better applications, and improve customer experiences.
APIs act as a layer of abstraction between data and logic required to run a task at the source.
APIs are applied to increase Mobility and Developer Productivity by taking an existing feature and using it anywhere instead of re-creating those features. Using existing features helps in minimizing application development time from months to weeks.
By eliminating barriers, customers can easily access your interface, which allows them to use your product according to their needs.
Focusing on analyzing the API services rather than application usability, you can utilize Customer Insights in making improvements that matter most to your top customers.
Automating requests and providing open access to your API is an invaluable way to streamline operations and create and maintain long-term, profitable business relationships.
An API allows ease of integration by allowing different platforms, applications, and systems to connect and share information and carry out different tasks. APIs automate tasks, provide better integration, and simplify the implementation of new applications and business models.
APIfication in Banking sector
The Banking and payments sector are the sectors experiencing the most disruption as they account for the largest segments of the financial industry. Fintech companies are transforming both the financial and payments industries through APIs, enabling virtually any tech company to offer financial products directly to their end customers through embedded technology.
Savings by Application Programming Interface (API) management tools in banking industry to reach $3.6 Billion by 2024
Open Banking: With the help of APIs, open-banking is considered to be next wave in the banking industry. It acts as an efficient, secure support system in providing businesses and consumers easy access to custom banking services. It involves the use of APIs that have access to the internal architecture of a bank.
Omni channel enablement: Creating an API layer on business systems for access from multiple channels like Web, Mobile, Bots. These APIs can then be used by 3rd parties within their platform to offer a more personalized banking experience.
Information exchange - Data on Demand: APIs facilitate Secure data sharing with 3rd party systems, partners.
Business process Integration: Straight through processing between internal and external systems for quick turnaround time, high scalability and throughput, and seamless customer experience.
APIfication in Insurance sector
Over-regulation, old-fashioned business models, and the lack of technology talent slow down industry innovation, which is harmful to customer experience. Customers demand flexible and innovative experience.
According to IBM, 41% of insurant abandon their insurers for an alternative one because they are unable to adjust services as per customers need.
The use of insurance APIs (application programming interfaces) addresses this lack of insurer flexibility as they can share information and services with third parties. Companies get an opportunity to suggest better customer experience, create new digital products, increase sales, and try disruptive business models. But APIs have lot more to offer to Insurers and Insurance industry -
Claims Processing becomes much more comfortable:
For Auto Insurance claims, instead of dealing with paper documents and phone calls, mobile devices' GPS functionality can be integrated with third-party APIs. Using this integration, policyholders can send a car accident location, set a timestamp, and submit photos of the damage, saving time. APIs can help in tracking and assist with car breakdowns, accidents, and thefts. Insurers can also use data to contact the client and arrange medical support.
It is estimated that nearly 50% of tasks performed by human intervention could be handled by APIs and augmented by 2025.
Offering Customized Product Experiences:
By leveraging tools such as AI and ML to interpret and process the data, customized offerings and real-time quotations can be delivered. APIs facilitate this process by quick and secure data transferring whenever a customer makes a specific request.
Risk Evaluation through Device Integration:
APIs help insurers in accessing larger data which helps to provide enhanced intelligent risk evaluation, real-time fact-checking, and reduced underwriting times to their customers. From the data from wearables, insurers can analyze APIs connected to wearables to measure the number of steps, heart rate, etc. and evaluate risk tolerance.
The modern vision of Fintech and insurance IT relies on API-led connectivity. For organizations looking to achieve the speed, agility and enhanced digital capabilities necessary for optimizing customer experiences, APIs are a must. As the digital ecosystem further shapes up, the leading carriers of tomorrow will be the ones who leverage APIs to partner in a larger network to deliver a full suite of best-in-class solutions and services.
At NSEIT we are committed towards helping businesses grow using our digital-native solutions. We can help you determine an API strategy and planning a roadmap offering significant benefits. To know more about our Digital Transformation services, or drop us a mail at firstname.lastname@example.org.
Assistant Manager, Presales and Solutioning
Shikhar is a part of the Presales and Alliance team at NSEIT - working with senior leadership on identifying and growing the strategic alliances in digital transformation practices disrupting the Banking, Financial Services, and Insurance space. He’s an MBA from the Great Lakes Institute of Management, Chennai, and takes a keen interest in new-age digital and analytics developments.
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