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  • Anjali Verma

Importance of API integration in the lending ecosystem

Table of Contents:

What is API integration?

How does it work?

Various Types of Lending APIs?

Benefits of Lending APIs:

Conclusion:

Distribution of communication infrastructure is essential for business growth, and pervasive networking is a sudden rise. There is a need for systems to communicate with one another quickly and reliably, without any data loss and any security issues. Sharing data and software with one and more applications without harming the security is what API is all about.

Today APIs are a necessity for modern enterprise IT.

According to a Research and Market report, by the end of 2024, the global API management market size is expected to reach $6.2 billion from $3.02 billion in 2019. Based on the recent survey conducted by Cloud Elements, 83% of major global firms from 44 countries consider API integration a critical part of their business strategy to drive digital transformation initiatives. 77 % of the firms who participated in the survey also said that they have invested in API Management.

Let’s know in detail about API integration.


What is API integration?

API stands for Application Programming Interface. An interface allows communication and connectivity between two or more software applications. A way two systems talk to each other is called API.

Now API integration refers to a consistent availability that allows the institution to mechanize business activities and improve the sharing and implanting of information between different applications and frameworks.


How does it work?

APIs are fast, secure, reliable, and efficient and help eliminate barriers to achieving the organizations' desired goals.

We understand that an API is a messenger that takes requests, translates, and delivers responses between receiver and provider. Let us understand this with a simple example of a customer at a restaurant ordering food from a menu from a waiter and the waiter takes the order to the kitchen. Here, the waiter acts as an intermediate (API) between the customer and the kitchen to communicate and deliver the food.


Various Types of Lending APIs?

Onboarding APIs:

Borrowers are onboarded using onboarding APIs in lending. Traditional onboarding procedures are laborious, time-consuming, and prone to mistakes. They also call for a lot of paperwork. Digital onboarding of borrowers has become possible because of the traditional onboarding method's rigidity. Comparing the traditional onboarding procedure to the digital one, the latter takes less time to complete. These APIs would provide details about the loan's size, anticipated time frame, and type.


Credit underwriting APIs:

Credit underwriting APIs give the lender precise, pertinent information they need to create the best loans for the borrowers. They gather client credit information from CIBIL and other important alternative sources and provide it to the lenders.

The data algorithms in the API program compile data from many sources and transfer it to the internal system of the lender. The amount and caliber of data a lender has access to reflect how competitive the lending institution is.


Loan fulfillment APIs:

To disburse loans to customers and preserve loan account information on the platform for accounting and processing needs, loan fulfillment APIs are employed.

Following loan confirmation, a loan agreement will be electronically created, delivered to both the borrower and lender and signed. By debiting the lender's account and crediting the borrower's account, the loan would be disbursed.


Loan Collection APIs:

To track and collect loan EMI, collection firms use the loan collection API to enable them to get the most recent information about debtors. Financial institutions have benefited immensely from these APIs since they can employ all of their resources, which facilitates overall debt collection and adds complete transparency to the procedure. Additionally, it makes connectivity with mobile and web platforms easier, allowing for quick, paperless transaction processing and risk reduction.


Benefits of Lending APIs:

  • APIs can be used to quickly run programs, provide data, or gather more data needed to meet your varied reporting requirements.

  • The automation of workflows that APIs offer is a benefit. More smooth processes, fewer errors, lower staffing needs, operating expenses, and increased automation are all advantages.

  • Through the use of APIs, lenders can quickly decide whether to approve a loan application by obtaining data from any third party, including both public and private organizations.

  • APIs are completely safe and secure because they don't contain any data storage.

  • Lenders and financial institutions can use third-party vendors using APIs if those suppliers better suit their operations than the options offered by the vendor of digital banking.

Conclusion:

SynoFin meets the digital needs of different financial institutions that offer their clients financing services.

At SynoFin, we have created the most comprehensive lending system with the following capabilities:

  • New-age, feature-rich, SaaS-based lending system, with a flexible pricing model

  • Highly configurable - you can make changes in days instead of weeks

  • Great support with super-fast implementation

  • Ready-made connectors available for migration within 3 weeks - from popular lending systems to SynoFin

Visit SynoFin to know more about our services!




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