Many of us who have not been technologically ordained, have multitudinous questions about the different aspects of fintech and its associated literature. The term “API” also belongs to the unfamiliar vernacular for many, which is quite frequently used in the fintech sphere.

An essential jargon in the software world- API, short for Application Programming Interface, simply put, is the means of communication between applications or programs. API lays the groundwork for how systems interact with each other, how data is transferred from one application to another, and more.

An easy way to understand APIs is to think of them as the language of software and applications. When you feed in your credit card details to make a payment on Amazon, the Amazon application communicates with your bank application to verify your details, enabling a successful purchase. This communication is possible because of the API.

How Does an API Function?

For this transfer of information to take place, there are at least three parties required:

–    The party that makes a request or a query

–    The API that transfers this information to and fro between both parties

–    The information holder or supplier

The Steps Involved

Step 1. The requester (client) requests an application.

Step 2. The API receives and processes this user request by engaging with the supplier (external) application.

Step 3. The supplier application sends the information to the API.

Step 4. The API sends this information to the requester.

And so, the circle of communication is complete.

 APIs have been designed as the language for systems to communicate with each other for easy data transfer from different applications. This means of communication is conceptually the same as a user interface, where the interface has been designed for users (us humans) to interact with systems.

Private | Partner | Public – The 3 Types of APIs

Private APIs are designed for internal use in companies. If a company has in-house applications exclusively for their staff, they use private APIs to communicate between their internal applications. 

Example: Apple Music connecting with Apple Wallet for payments.

Partner APIs are designed for communication between different websites (or companies) that have partnered with each other to give and take access to information. 

Example: Apple Music engages with PayPal (or other online portals) for payments.

Public APIs (or Open APIs) are available for use, by anyone and everyone.
Example: Using Google Maps as addresses or location pointers on numerous websites.

Do APIs Come with Hidden Benefits?

Not only have APIs been instrumental in making information transfers between different applications easy, but they also allow more flexibility, creativity, and, more than anything, a layer of security.

With the existence of APIs, it is possible to build different types of applications for various purposes involving diverse information that can communicate with each other to produce better and more refined information or results. This enablement gives a better chance for creativity and innovation of applications, where there are no rigid restrictions.

But one of the most crucial roles of APIs has been to provide an extra cover of security of information as the information shared through APIs is restricted and systematized. The user application does not have access to the entire database of the supplier’s application, so the application can only gain access to what is supplied through the API. This restriction enables very secure transmission of information between applications, making APIs extremely valuable to us.

High-performance REST API by FlexM

REST, short for Representational State Transfer, is an architectural style for APIs that puts up some constraints and allows engagement with RESTful web services through HTTP requests for data transfer between parties.

FlexM offers high-performance REST APIs that allow better and more inclusive control to different company developers. There are end-to-end encrypted, ensuring security and safety of data transfer. FlexM APIs allow the following HTTP methods:

–         GET – To fetch the data

–         POST – To submit the data.

–         PUT – To update the data

–         PATCH – To do the partial modifications of the data

–         DELETE – To delete the data

To Conclude

The API technology has been in existence for many years now, however, it is recently that its popularity has grown exponentially with the rise in fintech services like open banking, e-Payments involving third-party apps, etc. It is the means of communication between applications of different entities that enables better transfer of data and information and eventually helps build a more secure and concrete system.

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The insurance sector is one such segment in the financial world that has not been able to become a mainstream industry regardless of its importance in consumers’ everyday lives. Being an integral part of financial and investment security, people understand its importance, but owing to the level of complications and ambiguity involved, many choose to steer clear of this particular segment.

The lost market of the insurance sector is one of the many incentives for creating a digitally-equipped system of providing insurance, now known as InsurTech.

Defining InsurTech

The creation of a digital setup for providing insurance to consumers, by employing technological innovations and solutions is called InsurTech. The technological advancements in the insurance industry empower it to create and administer insurance services at different levels as per the needs of the customers.

The Origination of InsurTech

With the insurance market not being able to grasp adequate ground to traditional financial institutions to enter this domain was immense. This led to banks and financial institutions acquiring and merging with insurance providers, to leverage the insurance expertise and tools to offer these services in-house.

Another aspect that influenced the convolution of banks with insurance providers was the customary requirements of consumers. In the process of making a purchase and getting insurance, like in the instance of buying cars, or jewelry, the involvement of insurance providers occurs in succession to the role of the banks. For such purchases, banks typically recommended insurers, but this tiny gap in the sequence of events, where customers needed to look for the best insurance providers suiting their requirements, made customers wary of the process; sometimes resulting in them neglecting the second step of the purchase of getting insurance, altogether.

Digital Solution for Embedded Insurance Options

Such lags and gaps in the system and procedures of purchasing and then availing insurances steered the attention of fintech companies to the gigantic scope of technology. With more and more financial institutions realizing the opportunity to partner with insurance providers and offer instant and in-house insurance services, the emergence of InsurTech became inevitable.

A study conducted by Pymnts Survey brought into light that customers were more receptive to availing embedded insurance options by banks than separately venturing to seek the best-suited insurer for them. This study revealed an insightful trend in customer behavior, where customers preferred getting instant and relevant insurance policies at the time of purchase itself.

The Opportunities for Financial Institutions

With the advancement of InsurTech emerging rapidly, the role of financial institutions has burgeoned extensively. Many new areas can be targeted by banks to offer improved insurance services to their customers.

Banks and financial institutions are one of the most trustworthy entities existing in the world, that have access to boundless data and information. Banks and insurers can use these two factors to build a niche in-house insurance market.

When people purchase plane or train tickets, companies nowadays offer instant insurance from their choice of insurer. The idea can be conceptualized and used in several other domains, where banks and financial institutions study customer activities and trends and provide insurance-related services without requiring any additional steps from the customers.

Another potential area that could use intelligent developments in the card market. Card providers, debit, and credit can partner with insurers to provide instant and customized insurance policies, where the customers use their cards to make purchases for travel, shopping, loans, etc.

With Great Power Comes Great Responsibility

While the InsurTech market has immense potential to expand and become an independent niche, banks must keep a few points in mind when selecting their partner insurance providers.

Most branches of fintech require the implementation and use of Application Programming Interfaces (APIs). With banks aiming to partner with insurers to offer embedded insurance services, it is imperative for insurance providers to have API-infused structures, to enable better and smooth transfer of data and technologies.

Banks should also keep track of the licenses the partner insurer possesses, as some domains and regions require special licenses, which otherwise could jeopardize the entire system.

A key point that needs to be streamlined in the InsurTech setup is the different and defined positions of both parties, namely, the financial institutions and the insurers. The typical structure of insurance involved a direct-to-customer approach, whereas, now with the involvement of banks, the corroboration of business-to-business and business-to-customer would be required.

To Conclude

InsurTech is a fairly new stream of fintech which is yet to get polished and streamlined completely. However, there are countless opportunities that this stream presents, which could give a massive boost to the insurance sector. With so many participants entering and merging into the bigger landscape of things, entities need to acquire niches, which would safeguard their position and values in this fast-moving world.

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The revolution caused in the financial and banking industry due to the penetration of technology has been immense. We have come quite far from long-established methods of financial and banking services. Nowadays, it has become quite normal for an average consumer to be able to make international transfers, take quick loans, make everyday purchases on credit, and more. 

As fintech transforms further to accommodate more innovative solutions in this space, it has compelled a synonymous transformation of the world wide web.

The Evolution of the World Wide Web

The World Wide Web, more commonly known as the Web, has undergone tremendous developments over the years. What originated in the 1970s has become a dominant part of our lives now.

Web 1.0

In 1970 the Web came into existence when the number of participants was low, and the simple objective was to share read-only information using static webpages. There were no illustrations, just content including pictures organized using frames and tables. This generation of Web was company driven.

Web 2.0

Then came the second generation of the Web, where there were mighty changes in all its dimensions. This new generation brought revolutionary alterations as the Web could now have better reach and multitudinous users, and the objectives had also transformed to include reading as well as writing. The content available online grew astronomically both in quantity and quality. The most prevalent dimension of the Web was its integration of social tools that helped increase collaboration, communication, and information sharing globally. This generation of Web was more community driven than company driven.

Web 3.0

The third generation of the Web has recently surfaced, causing a marked disruption, where the intention is to decentralize data by empowering users with better control on the Web. The focus of the Web has shifted from company and community to a more individual perspective. Terms like virtual reality, artificial intelligence, user behavior, engagement, etc., are rapidly finding more ground.

What Web3 Means for the Fintech Industry

This is one of the most exciting spaces that has unfolded since the emergence of the third generation of Web – how Web 3.0 will strike fintech. We can already see the inclusion of blockchains and cryptocurrencies in the world of fintech, but only time will reveal the extent of its other effects. While we wait to ascertain the overall impact of Web 3.0, there are a few areas that have already surfaced as game changers with the corroboration of fintech with Web 3.0.

Personalization

The primary objective of Web 3.0 is to increase individual control and focus, which is synchronous with the aim of fintech to enhance customer engagement and services. By creating a secure network where information is decentralized, and users have better control over how they would like their environment to be, the goals of both Web 3.0 and fintech can be achieved. Artificial Intelligence has been in use for some years, but its applicability is now being tested against more profound levels to make the entire Web space more personalized for users. The technology is widely being used by companies to retain and analyze more consumer data to get insights into their behavior, needs, likes, and dislikes. Companies can then use these insights to enable personalized advertisements and products.

Security

Web 3.0 has introduced us to Blockchain technology, which is the platform used to store and operate cryptocurrencies. This technology provides a decentralized ledger that is not governed and controlled by any party except agents like transparency, documentation, and accessibility. This technology has been applauded for its incredible security and transparency that tracks and documents every activity. The magnitude of security that comes along with this technology has inspired fintech and the concept of decentralized data has gained prevalence with the emergence of open and challenger banks.

Faster Processes

Another key area that has been a common goal shared by both fintech and Web 3.0 is better user control and faster turnovers. With technologies like machine learning and artificial intelligence, the aim of empowering consumers in having better control over their financial and banking activities has materialized successfully. By automating complicated processes like financial institutions making credit decisions and investors getting market insights, Web 3.0 has significantly fastened the entire system. The lengthy procedures involved in activities like asset management, insurance decisions, and cross-border remittances have found renewed and quick solutions in fintech powered by Web 3.0.

Conclusion

With such extensive developments shaping the fintech industry, there is no doubt that what we see and experience today will change for the better, in another few years. Web 3.0 has brought an advanced level of disruption that is immensely innovative. By aiming to transform a centralized and developed market into a decentralized one, Web 3.0 has reduced all misgivings about the scope of technology to naught. The Web 3.0 technologies being implemented to take the helm of fintech are innovative, intelligent, and trustworthy, and now it is time for us to prepare for the grand revelation of how this technology shapes our future. 

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The popularity of digital payments and remittances is on the rise. Whether it is e-commerce, international payments, or money transfers, there is a wide spectrum of options available for consumers. All the payment options that are openly and readily available nowadays have mainly found their origination under the vast umbrella of customer services. With more and more businesses and startups pouring into fintech, improved customer services and efficient systems have become a must. 

What are Digital Payments?

Digital Payments or Electronic Payments are payments that are cashless and mostly contactless. These payments are implemented using digital platforms, such as electronic wallets, Buy Now Pay Later, Touch and Go, etc.

Since the pandemic, the adoption rate of digital payments has surged tremendously with the number of e-payments increasing by more than 300 billion in number since 2020. The pandemic has propelled the fintech industry unbelievably.

Different Types of Digital Payment Methods

With more participants entering the industry and a heavy focus on improving customer services, fintech has witnessed an astronomical evolution in the past few years, vis-à-vis digital services, including payments. With most big and small companies providing contactless and cashless payment options, the methods of conducting payments have changed immensely. Read on to see which payment options are gaining ground nowadays:

Credit and Debit Cards

MasterCard and Visa have been the long-standing key players in the financial world. Even with the banking and financial sectors taking a digital turn, this payment method still predominates owing to its familiarity and well-established reliability.

UPI (Unified Payment Interface)

UPIs are payment interfaces that allow customers to make transfers from one bank to another. With simple onboarding procedures, including KYC, UPIs provide cashless and contactless options, that are carried out directly from bank accounts, making them secure and reliable.

E-Payments from Banks

 Digital payments using banking portals are also reliable options that are mostly used to make international transfers and payments.

–         Online Banking- Net banking or online banking allows users to make transfers and payments using their bank accounts by accessing them online. 

–         eChecks- Electronic checks are prevalent in the US and they are mostly used for making international payments, where the entire process is built on the same concept as traditional checks but is faster.

–         Small Credits- Banks partner with third parties to provide credit options to customers, where they can choose to pay in installments or some time at a later stage for their purchases. EMIs (Equated Monthly Installments) and BNPL (Buy Now Pay Later) are examples of this method.

e-Payments Using Mobiles

With the upsurge in the adoption and use of mobile phones, fintech companies have revolutionized payments by providing different payment options that customers can choose from according to their requirements and suitability.

–         Applications- There are innumerable mobile applications that enable e-payments by linking the user’s cards, bank accounts, e-wallets, or UPI to enable quick payments and transfers.

–         QR Codes- Unique QR codes are provided by mobile applications, UPI servers, etc., for users to scan these codes using their devices and make payments using different options like online banking, UPI, and mobile wallets, etc.

–         Biometric Verification- Biometrics is a newer technology that has started making rounds in the fintech spectrum, where customer verification is done using registered biometrics to carry our payments.

–         E-Wallets- Digital wallets allow users to store their digital cards or bank details safely, using e-wallet applications. Users have the options to use their cards, or bank accounts, for contactless and cashless payments using their phones.

The Internet of Things

With fintech broadening its horizons to include digital objects, the internet of things has also taken the world by storm.

–         Smart Speakers- Internet-enabled smart-speakers like Google Home, Amazon Echo, Apple Home Pod, etc., are connected to the users’ smartphones via Bluetooth, allowing them to converse and make purchases without even operating their phones. 

–         Smart Watches- Smartwatches too are connected to the users’ smartphones enabling them to make payments through them.

NFCs

Near-field communication is a technology similar to Bluetooth that connects devices in defined proximity. This cashless technology uses a chip system where devices are connected to make payments and transfers. For example, multi-utility stores have payment devices that allow customers to touch their cards instead of swiping and entering their passwords, making it quicker and more efficient. 

Cryptocurrencies

Cryptocurrencies are decentralized currencies that are secure and not governed by any agency. These currencies operate and are stored in digital journal ledgers called blockchains. As these currencies are decentralized, they allow easy international transfers, especially for large amounts, which would otherwise not be possible. 

The Takeaway

With the extensive downpour of fintech technologies disrupting traditional systems, the world has witnessed incredible change in the way we bank, purchase and pay. The wave of fintech has just started rising in the past few years, and it is a long projection of which trends and technologies would eventually become our future. Most of us have come across and used one or more of the technologies mentioned above. It is only with time that we would be able to evaluate which ones are most user-friendly, practical, and secure.

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As fintech continues to revolutionize banking and payment methods, there are a myriad of services and products are offered to users ranging from simple e-payments to international transfer involving cryptocurrencies. With fintech picking up steam, the world is gradually becoming smaller and faster. Countries like USA, UK, Singapore, Japan, and China lead the way for fintech builders and consumers, while countries like Indonesia, India, Thailand, and more gradually make their way up on the fintech ladder.

One of the fintech technologies that has captured everyone’s attention recently is BNPL- Buy Now, Pay Later.

Breaking Down the Concept of BNPL

BNPL, short for Buy Now Pay Later, is a credit arrangement offered by companies which allows users to make purchases without paying for them upfront. This process involves instant approval of credits at the point-of-sale without the hassles of KYC and verifications, making the purchasing system much simpler and more efficient. 

Facts & Figures

–         The total valuation of the BNPL market stands at $100 billion USD.

–         BNPL started gaining ground sometime in 2020, after which it gained immense popularity, propelling its adoption rates to increase manifold by 2021. With its rapidly growing traction on the world, the BNPL market is expected to cross the $700 billion USD mark by 2026. 

–         Sweden has the largest market share in BNPL, followed by the USA. India is progressing towards becoming the largest market for BNPL in the near future.

–         Affirm, AfterPay, Klarna, Sezzle, and Square are the key players in the BNPL industry.

Benefits of BNPL

There are a number of reasons why BNPL has become a popular payment option offered by companies. Not only companies, BNPL has several uses for customers that involves a customer-centric solution focusing on simplifying purchases.

Easy Purchases

BNPL allows the consumer to make the payment for their purchase at a later stage or in installments, which makes the overall journey of purchase much easier and more enjoyable.

No Need for a High Credit Score

Unlike credit cards, a user looking to exploit the benefits of BNPL does not require a high credit score. As the user gets instant approval on their request for BNPL, the verification carried out is majorly superficial, that does not include analyzing the credit history of the user.

Simple Procedure

Opting for BNPL involves an easy process, where the user selects the BNPL option on the vendor’s website and provides a few personal details, enabling an instant approval for BNPL services. The user can then make the required payment as per a pre-decided calendar. 

Helpful in Times of Need

Having a backup in times of need is a big reason behind BNPL’s growing popularity. BNPL helps resolve issues where the customer is unable to make payment upfront for various reasons, giving the customer a boost by enabling them to purchase without needing to pay instantly.

Promote Purchase

Not only for customers, BNPL has proven to be a boon for companies as well. With more companies and vendors offering BNPL, customers are getting more accustomed to the idea of not having to pay instantly, which has promoted purchases substantially. 

BNPL is Not the Same as Credit Cards

Though built on similar concepts, BNPL and credit cards are quite unlike each other right from the basics. BNPL is like the simpler version of credit cards, where all the processes involved are not as complicated or exhaustive as the ones in credit cards.

Verification

The verification process for credit cards is quite intensive, where the customer’s income statements, credit history, behavior and expenditure trends are closely analyzed to ascertain the potential profitability of the consumer. It is not the same in the case of BNPL, where the verification process is minimal, and the approval is instant.

Purchase

The purchase made using credit cards involve making payments using the consumer’s allowed credit limit, where the credit card server charges interest on the amount used.

In BNPL, the credit is allowed only for that particular transaction, mostly involving no interest or fee.

Payment Process

The payment process in credit cards, is mostly determined by the consumer, where they make payments to their credit card servers, as per their suitability. In BNPL, the payment procedure is well-defined, and the user is intimated about the time and amount of payment, failing which the user is penalized.

Credit Scores

The approval of credit cards requires the user to have a high credit score. And the user’s credit card usage also affects their credit score. This is not the case in BNPL, where the user’s credit score is mostly not taken into account during the approval of BNPL.

Bottom Line

BNPL is a concept that has revolutionized the way people are making purchases, including cross-border payments. With easy options offered by vendors and companies to grant instant purchases without paying, the level of consumer satisfaction has reached a significant high. Because of its simplicity and usability, it is easy for users to opt for this option. But the consumer should be weary of getting consumed in debt because BNPL only helps delay payments, not evade them.

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With the astronomical rise in the adoption rate of fintech, the focus on customer services and user experience has magnified dramatically. As more participants enter the service market of fintech, providing excellent, efficient, and competitive user interfaces has become a popular mandate. 

There are more than 6 billion smartphone users in the world presently. The key USP of fintech is digitalizing banking and financial services to enable easier transfers, payments, investments, and more, across the globe. The medium that is more popularly used to bring consumers and fintech services closer is- smartphones. Such an affair directly opens doors for fintech providers and servers to create user interfaces that could help build instant bonds between financial institutions, fintech providers, and customers. 

This is where user experience comes into play.

UX Explained

UX, short for User Experience, is the interaction and engagement of potential and existing customers with a company’s services and products, through their user interfaces (UI). All processes and activities involved in the user exploring different products and services of a fintech and using them make up for the whole user experience. 

Consumers base their experiences on the design, engagement level, and quality of the interfaces, making it essential for providers to create relevant interfaces that are intelligent in different aspects like language, theme, graphics involved, loading time, etc.

5 Factors Influencing UX

All online services and products require good UI that can cater to an average consumer’s UX expectations. As more consumers interact and integrate internationally, the competition level increases manifold. Someone having experienced excellent banking services while studying in the UK would expect similar standards when they are back in their home country like, Canada or India.

Not only internationally, but the level of competition in the industry is also very high, compelling fintech providers and technology companies to offer innovative and disrupting interfaces that speak the customers’ languages. Some of the factors that directly influence UX are:

Intuitive Content

To provide a seamless experience with content that resonates with customers, fintech providers need to focus on the intuitive aspect of the design of the application or website. The intuitiveness and simplicity of the website or application content decide how seamlessly a customer would be able to navigate through them.

Customization at Every Step

With more information, fintech servers have the power to provide personalized content for their consumers. All consumer activities and expectations are different, which makes it crucial for fintech servers to offer customized services and content, to prompt a better experience for their users.

More Power to The Consumer

By building interfaces that give consumers better control over their banking activities and accounts, fintech can unleash a different level of UX. Consumers seek easier interfaces that allow better control for the consumers on their banking and financial activities.

Data Security

Boosting the security of the website or application is a necessity more than a want. The level of trust consumers place in fintech providers reflects the importance of data security for UX.

Application Interplay

A key advancement that plays a huge role in determining UX levels is the application’s or website’s ability to interplay and integrate with other applications and websites. It is built based on acceptability, like in the case of credit cards, where they are widely accepted by vendors both online and offline. 

How Fintechs are Enhancing UI

To boost the UX level of consumers, the key for fintech providers is to upgrade their UI. Fintech world over has employed strategists, designers, and UX/UI experts to create and enhance UI that caters to the explicit and implicit needs of customers. Some of the methods of enhancing UI are:

Simple Designs

Simple and relevant designs that complement the goals of the fintech provider are an essential element that reflects maturity and trustworthiness in a brand.

Engaging Text

Internet usage of people has fiercely increased globally. With more time being spent on the internet, there is a huge change in the way websites interact with consumers nowadays which has led to an unconscious mass absorption of the way applications and websites interact, giving way to similar expectations. Such expectations require fintech to create engaging and interactive content for its consumers.

Theme

In creating a good UI, fintech must determine a color theme that reflects the organization’s goals and caters to the targeted audience.

Tone & Voice

Gone are the days, when the tone of voice was the deciding factor for content creators; nowadays both the tone and the voice of the organization play independent and equal roles in determining the company’s content language, level of friendliness, formal to informal ratio, etc.

Loading Time

Because fintechs are expected to be equipped with advanced technology to provide easy and quick solutions to consumers, any lag in the loading time of the UI can have a damaging effect on UX. 

The Takeaway

User experience in fintech is a key component of customer services, which has been an integral part of the foundation of fintech. With users becoming more acquainted and accustomed to online processes, the focus on UX UI is growing rapidly. UX and UI have now become business investments for fintech, that help them offer better services, resulting in prosperity.

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