APIs Are Changing Financial Technology

Executive Summary

A lack of interconnected technology systems causes many lenders to manually enter data into their lending technologies. This increases the chances of data duplication and poor data quality. To fix this, many hours are spent which could otherwise be used to improve customer service. APIs (Application Programming Interface) solves this problem by automating repetitive processes that improve data quality, plus it’s compliance-friendly. This enhances the mortgage origination experience for the lender’s internal customers, which then improves the quality of their customer service. 

The Building Blocks

APIs (Application Programming Interface) are the building blocks of software. They are the interface that computers use to talk to each other. They make data sharing more accurate, secure, and easier to use. APIs can help remove limitations of pre-packaged off the shelf software solutions and allow for more flexible access to third party data/services. APIs can help financial institutions provide a personalized user experience while lowering costs. Instead of relying on a “one-size-fits-all” approach, these institutions can provide users with multiple options to choose from. Users are always seeking to find a user experience that best meets their needs. Businesses can help users by integrating programs and apps that consumers use daily.

APIs are also commonly used in financial markets, eg. peer to peer programs, investment management, and KYC (know your customer) regulations. A good example is Barclay’s APIs which can allow user authentication, initiating payments, retrieve account and transaction details. This information can then be seamlessly integrated with a personal budgeting app for quick information retrieval by the user. This frees the user from the redundancies of login into Barclay’s website each time to reference information for manual entry into another app.

Leveraging APIs

Leaders in the mortgage industry will be the lenders who have built a customer-centric experience through API technology integration. Creating a platform that is designed to support mobile engagement and focus on client needs is a step in the right direction. Advanced companies are currently leveraging one-touch technology to offer customers an easy and efficient multi-service experience, which will also help to reduce below the line expenses.

Most platforms on the market only serve one part of the mortgage process and regulatory compliance is often one of the major challenges the mortgage industry faces. Implementing APIs can help facilitate compliance with changing regulatory requirements. They can execute programs that adhere to certain criteria and run on specific dates to meet required deadlines, transmit data or collect additional data as needed by a lender’s reporting requirements. Integrating with a LOS (Loan Origination Software) and servicing software allows the necessary people to easily access information across a variety of systems as well as at the right stages.

APIs enable mortgage companies seamlessly order fulfillment services from a variety of providers and share data across platforms allowing users to remain in one system. Lenders are investing in APIs to cut time, costs, and provide the most transformative efficiency gains for the future. To implement APIs, lenders need to ask questions such as “what data can be automated” and “how can existing workflows be consolidated”.

The API Solution

In the past, to determine loan eligibility, lenders had to manually pull information such as borrower credit scores. Now, by using APIs, lenders can integrate their online portal or loan origination system (LOS) with credit agencies to determine loan eligibility instantaneously. Lenders might not see a return on POS investments because digital applications don’t always improve efficiency. An increase in application intake without process efficiencies could increase the cost per loan. An example of a cost saver is assisting automatic address verification by using the USPS API.

Implementing APIs allow for a more holistic view of data flow and collection, which can help to measure KPI (Key Performance Indicators). The key is to leverage technology by choosing software systems that will work together seamlessly providing an enhanced proceed for lenders, originators, and borrowers. It can be difficult to implement the right technology for your needs, but partnering with a company like Indica Digital can ease that process.

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