Customers today are tech-savvy and expect ease in any service they take. As far as banking and financial industry are concerned, they expect easy and quick transactions, streamline loan processes, fast funding, and paying ease. You can’t underestimate the importance of APIs in open finance or banking. In the modern ecosystem of open finance, APIs are a way for doing business. Financial institutions that are embracing and implementing APIs can extend and improve their services and offerings. Moreover, FinTech app development is on the rise and will become a priority in the coming years. Similarly, to understand customer’s needs and meet their expectations, financial experts must keep striving to offer better service by integrating APIs. How Traditional Banks Can Leverage APIs? Though traditional banks are eager for FinTechs and APIs, they are quite slow to adopt. However, now, it becomes important for financial institutions to integrate new technologies to stay ahead of the competition and meet customer needs. By accessing their borrower’s most accurate and real-time data with the help of an API, traditional banks can attract new customers and retain the existing ones. Moreover, APIs also help banks to offer new and innovative financial products and services to their customers. This also allows banks to offer customized lending solutions powered by advanced technologies. Leveraging APIs not just make traditional banks smarter, but also enables borrowers to engage with financial data in advanced ways. It can help lenders boost trust and brand loyalty, which further aids customer engagement and enhances customer satisfaction. Today, many FinTechs are creating futuristic financial data APIs that allow lenders to safely access data and seamlessly perform banking functions. This data includes banking, accounting, financial, cash flow predicative, online, social media, and more. What is the Future of APIs in Banking? Considering the unstoppable growth of FinTech and the growing adoption of APIs in banking, the future for APIs seems promising. In the coming years, it’s expected that more and more financial institutions will use APIs to streamline their work, offer customer-centric products and services, determine creditworthiness, reduce credit risk, understand customer needs and make great customer relationships. APIs are a win-win situation for both banks and the third-party companies that partner with them. Here are a couple of examples that showcase the future of APIs in the traditional banking sector:
APIs will surely transform the financial service industry. In the future, more and more payment providers, financial institutions, and leading financial services firms will leverage APIs to broaden and enhance services, boost automation, and improve security. Banks that fail to adopt this innovative technology, will pay high opportunity prices and witness a fall in their profits and competitive value. Conclusion Though API technology is not a new thing, it’s something that financial institutions have just got onboard. APIs have already started transforming the financial and banking sector and many financial experts are already leveraging its benefits. If you want to position yourself as a leader and become a financial expert of the future, API technology is something that you must embrace in 2021 and beyond.
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Why do small and medium-sized enterprises need loans? They avail credit to meet a variety of business purposes such as buying real estate, purchasing equipment, paying bills, hiring employees, making payroll, and more - the needs are varied. The Reason? Quiet simply to successfully run and grow their businesses and take their companies to the new height of success. Still, many SMEs remain out of the business funding ecosystem due to insufficient creditworthiness. To be able to successfully apply and obtain a business loan, banks, credit unions, and other financial institutions expect business owners to have an amazing credit history indicating their ability to repay the borrowed amount. Unfortunately, most small businesses such as new businesses and companies with limited or poor credit history can not comply with these guidelines. This is because they are lacking important financial resources that lenders consider when reviewing a loan application such as strong financial history, annual revenue, and credit score. Yet they are also the ones who need extra working capital the most. Forward-looking cash flow data credit scoring, a fintech invention, can address this paradox by providing a reliable assessment of the creditworthiness of the most vulnerable small business owners to regulated lenders. Cash Flow Predictive Data Credit Scoring and its Sources Cash flow predictive data credit scoring refers to the use of cash flow historical, present, and futuristic data for a borrowers’ credit risk assessment. This scoring provides information from multiple sources to determine small business creditworthiness instead of relying solely on the FICO score. With the help of machine learning and artificial intelligence, fintech derives cash flow predictive data credit scoring from small business accounting software, bank, cash flow forecasting, and more. All these data points help lenders to approve loan applications for SMEs. Costa, Validis, and ForwardAI are some of the top fintech companies that have created credit scoring solutions for SMEs. Codat provides accounting, banking, and commerce integration through a single API while ForwardAI’s API delivers the most robust suite of cash flow, accounting, and financial data for small business lending. Fintechs have simplified the process of gathering forward-looking data that is reliable and well-documented. Thus we can see cash flow predictive data credit scoring drive financial inclusion of the most vulnerable into the credit ecosystem. Benefits of Forward-Looking Data Credit Scores Opportunities for Both Lenders and SMEs Forward-looking data credit scoring allows a vast number of SMEs to enter the loan ecosystem especially those with limited or no credit history, which is good for both lenders and business owners in terms of business. Growth and Development More businesses get working capital to run and grow their operations. This is also a positive development for the country’s micro and macroeconomic growth. Diverse Pool of Customers for Lenders Both traditional and non-traditional financial institutions can determine the creditworthiness of more borrowers that are in need of credit. Banks and other lenders thus have a large and diverse pool of SMEs to take their products to. Better Loan Products for SMEs Forward-looking data provides the most robust accounting, financial, and cash flow data for small business lending. It allows lenders the ability to see deep critical insight into a business's financial health. This data helps lenders to determine a business's ability to repay the borrowed amount and make sound decisions in creating tailored lending products for SMEs. Balanced Risk and Service The conventional lending process has a lot of limitations. The lenders want to get as much data as they can, but they are helpless without an innovative technology to determine borrowers’ creditworthiness and gather risk data efficiently. Today, many banks are lacking the technology to balance risk and service. Forward-looking credit scoring will prevent efficient data gathering and tell lenders that a business will be able to pay back the borrowed amount, so there’s no risk in providing capital, and vice-versa. Whether you’ve just started your new venture or in the business for a while, capital is one of the most important aspects to expand your dream business and reach new heights. No matter how creative your business idea is, if you fail to fund your startup in the initial phase, you can’t make it to your next anniversary. Though there are several ways you can get your startup off the ground when don’t have sufficient working capital. The perfect blend of consumer behavior, marketing knowledge, business strategy, and talent can help aspiring entrepreneurs to secure startup funding for small businesses. Here are our top tips that can help you raise, manage, and maintain money throughout your business’ life cycle. Identify the Target Market For your startup to be successful and funded, it’s important to identify the target market where you’re going to present your products and services. As not everyone is your customers, this is one of the first steps you need to take after launching your venture. Marketing to the right audience can make or break your business. You need to do honest research to know what products you will sell, what will be their prices, where will your products be available, and how you will promote them. Create a Solid Business Plan Before approaching a lender or startup financing company, you need to develop a strong business plan. Having a clear understanding of how much you need, where to invest the amount, what are your strategies to earn a profit, and how long it will take to repay the loan will definitely increase chances of securing startup funding for small businesses. Consider Online Lending Platform/Marketplace If you’re finding it difficult to get a startup loan from traditional routes, online lending platforms might be a perfect option in this situation. These ground-breaking, secure, and intuitive lending marketplaces can help match your startup with a wide range of alternative lenders. You can find and compare a wide variety of startup loan offers and choose the one that fits your specific financial needs. You just need to fill out one simple application form, choose the offers, and once approved you can get the fund in as little as 24-48 hours. Request Your Current Lender You can request your current lender with whom you’ve been associated for many years and have a good relationship. Set up an appointment with a loan officer and don’t forget to bring the business plan. Explain each and every point mentioned above in the business plan in detail and the ask for the startup loan for your small business. Depending on your current situation, you may qualify for certain types of business loans such as equipment financing short-term loans and business credit cards that you could use to fund your initial business expenses. If the current lender denies your startup loan application and you’re not successful in getting the funds, you could try other local banks or financial institutions. Final Thoughts Securing a business loan for your startup is difficult but possible. It’s important that you always start with proper research to find the right market and develop a strong business plan. Try to follow these above tips as it can help you raise money and achieve future financial health and freedom for your startup. |
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