What Is an API and How Can It Help My Financial Institution?
What is an API?
An API (or application programming interface) is a tool that makes it possible for one software product to talk with another and share data. It’s the plumbing that connects them so that data can move from one platform to another.
How do APIs work?
A lot of people use the analogy of a waiter in a restaurant. There’s a menu of options (also known as a developer portal). You can choose from the menu of options and the waiter (API) delivers your choice to the kitchen (the software you need information from). The kitchen handles all the cooking, and, in the end, you get a beautiful meal. And you’ll consistently get that same beautiful meal every time you order it.
Now, let me give you an example. Think about Uber. Uber uses maps, but they don’t make maps. That’s not what they are good at. They're good at helping people find a ride.
Uber uses the Google API for maps. Rather than reinvent the wheel, Uber connects with Google maps to get that data.
What are the benefits of an API for financial institutions?
One benefit is security. Rather than having people go through login pages and downloading data, the process is now in a controlled state between two software products so it’s inherently more secure.
There are also efficiency gains. Entering data into multiple locations is not a good use of your team’s time. A financial API automates that process, saving a lot of time.
Another benefit is the cleanliness of the data. When you enter data in one place and the systems transfer it back and forth – instead of having a person enter it in multiple locations – it makes for cleaner data.
What can APIs do for my institution?
That’s the big question.
- Check on the status of all your vendors before paying any invoices through your accounts payable (AP) system.
- Get on-demand reporting on high-risk vendors into your CRM, IT ticketing system and other tools.
- Populate new cards in your task management tool so your team can stay in its native platforms and still make updates or understand workflows.
- Enter employee service activity for Community Reinvestment Act (CRA) tracking into a form that feeds into fair lending software.
- Pull down a list of vendors and their addresses into reporting tools.
- Sync lists of employees and their contact information between your organization and your business continuity planning provider.
What role does Ncontracts play in APIs?
I think of Ncontracts as the third-party risk management equivalent of the map. We are a risk and compliance toolkit.
This is especially helpful for institutions that use a variety of tools, workflows, and reporting mechanisms and need to share data. We house that data and create APIs so that information can be easily shared with other platforms.
Are there different kinds of APIs?
There are several kinds of APIs. An Open (or Public) API is accessible by the public and can be used by anyone, so they have few restrictions. Private APIs are used in highly secure environments, often internal to an organization, so they have tighter access controls.
Ncontracts uses what we call managed APIs. Like an open API, we want to create a framework where an institution can develop our API and use it in a way that’s meaningful to it. However, access to the Ncontracts APIs is controlled much like a private API whereby customers using our products must register and get approved for access to these APIs for their developers to create custom integrations.
We call them “managed” because we control access to the API. It’s only available to our customers, not the general public.
We also offer turnkey APIs. Instead of having people to program the API, you might only need a technical person for a few hours to hook it up to your system. We’ve done the rest of the work to make the data flow. We’ve done most of the heavy lifting for you. An example of that is Single-Sign On (SSO) for seamless access to our products from within your network or the Ncontinuity Connector for ADP Workforce Now®.
Be sure to register for our May webinar What Does Resilience Look Like? Building Future-Proof Financial Institutions
Topics: Product Insight