BBVA API Market
Digital transformation has driven the sales process of many companies, one of their key pillars albeit one of the most critical too. In recent years, we have seen the emergence of new digital retail channels, new services associated with the trade process and, of course, more and better offers and promotions.
This technological disruption has been possible thanks to the full potential provided by APIs, among other factors. The banking and financial industry has not been oblivious to this transformation and, thanks to open banking and new European regulations, has launched new options that serve as a basis for improving the sales process. One of the most interesting and novel options has undoubtedly been the possibility of obtaining financing instantly to boost the sales of companies.
To talk about open banking and APIs is to talk, almost necessarily, about customer journey (or customer experience), an increasingly important element within the financial industry, as users demand new financial products that fit their needs anywhere, anytime, from any device. The equation is simple: the more innovative and open the banking process, the more likely it is that its users will be able to obtain applications and solutions tailored to their needs.
This is precisely one of the pillars of the European PSD2 regulation: placing customers at the heart of the banking business. And it has been stressed by the Euro Banking Association, stating that open banking is concerned about being aware of customers’ habits, satisfying their needs and being one step ahead of them with innovative products. That is, the user experience takes precedence over any other consideration.
APIs help improve this user experience, especially in everything that has to do with the purchasing process. A clear example is the integration of bank financing solutions with business applications. This is especially interesting in sectors that generally offer financing for the purchase of their products, such as some recurring purchases, mortgage loans, loans for the purchase of a car, etc.
Thanks to these programming standards, for example, when customers are buying something, they can access all the information they need to decide whether or not they should complete the transaction as well as instant financing, customized according to their interests and needs, and all without leaving the environment of their service. This revamped user experience can be the ultimate boost to ensure the transaction goes through.
But what exactly do APIs improve when compared to traditional sales processes? Bank credit and loans have always been available, especially in some acquisition processes where financing is usually involved, such as buying a car or a home. The difference lies, fundamentally, in immediacy.
Loan agencies have the right tools to assess whether a particular customer is eligible for financing. Thanks to this strength, financial institutions can study the solvency of bank customers to understand their behavior, identify hidden risks and thus offer the financing that best suits their interests.
The conclusion of these analyses is shared with fintechs thanks to APIs such as Auto Loan or Checkout Financing, with a view to developing solutions that fit the needs of customers, in real time and at the same time as the purchase process. In general, if the outcome is positive, the customer will see an on-screen confirmation that their application for financing has been authorized.
PwC’s report “The future of banking is open” highlights the virtues of open banking to calculate the solvency level of customers about whom there is not sufficient financial information (known as credit scoring thin-file) to then decide which financing option is best suited for their profile. Thanks to this possibility, the potential of open banking could increase sales of SMEs and distribution companies by more than 7.2 billion pounds by 2022.
Consequently, financing can reach many more people, especially those who have not had much contact with banking products and, in general, with financial activity. In addition, the vast majority are young users who have grown up in a digital context, and who can benefit from the familiar-to-them advantages that APIs provide such as a fully online request, not to have to go through a branch or agency, etc.
BBVA has also wanted to join this paradigm shift, offering several APIs that provide instant financing for its customers. One of them is BBVA’s Auto Loan for the automotive sector. It makes it possible to perform real time simulations to check the details of a possible loan for a car. Something similar is offered by the Mortgage API, but with a focus on mortgages, and Checkout Financing, oriented to loans that are granted at the same time as products are purchased.
With all of them, any service can integrate financing within the purchase process, customize the offers and make available to users all relevant data about their loan, e.g. its limits, amounts, terms and fees.
One of the most common use cases of instant financing is Pay Later, which improves the corporate purchasing process and user experience. Until now, e-retailers only offered their customers the possibility of cash payment. However, thanks to the full potential offered by the new APIs, consumers have an additional option: the ability to finance their purchases at the same time as the business transaction.
This was made possible by a new standard launched by SWIFT last year, an API called Pay Later standard, through which any application can integrate the pay-later feature. This allows users to access a number of instant financing options from a set of European banks and select the one that best fits their profile.
The process is as follows: funds from these instant loans are sent directly to the retailer in real time. The retailer, in turn, sends the goods directly to the customer who is subsequently responsible for making the corresponding payments. As a consequence, sales increase, as there is more liquidity to complete the purchase, and entities can reach a much wider customer base that would not buy the product in cash. Also, the security of the purchase process is further strengthened.
In short, APIs have become an ally for the digital transformation of major business processes; and something as important as completing commercial transactions at the point of sale was bound not to be an exception. A paradigm shift that will undoubtedly serve to increase the sales of any business.
Rulebook 43 is one of the main banking communication standards. It allows any company to receive daily statements of its accounts and, although they still have a long way to go, APIs can help implement it in any size of company.
Checkout financing is a digital alternative to credit cards that boasts advantages such as flexibility, creating one credit facility per customer and ensuring their future loyalty, thus improving the customer lifetime value.
APIs can be designed to facilitate customer onboarding, so that the necessary steps are simplified and registration for the bank-mediated service is maximized.