With the introduction of Open Banking, application programming interfaces (APIs) have become an increasingly popular topic of discussion in the banking world in recent years.
But how do they benefit mortgage and commercial finance brokers?
To find out, Specialist Banking spoke to banks, API providers and companies that make use of them.
What are APIs and how do they work?
“An interface is a way for two different parties to speak to each other in a way that they both understand,” said Ross Garrett, head of product marketing at API integration platform, Cloud Elements.
“For example, you can use your keyboard to communicate with your laptop and your fingers to communicate with your iPhone’s touchscreen.
“The ‘interface’ between two people speaking is the language of their communication.
“They both need to understand all of the content, protocols and rules of the conversation.
“An API is similar: it’s a way to allow computer systems to have a common interface, so they can communicate with each other.”
James Bloom, managing director of short-term lending at Masthaven, added that an API was a program that allowed the source and destination (in this case, broker and lender) to transfer information between them; meaning that a single source could speak to multiple destinations.
Nicola Firth, CEO at Knowledge Bank, explained that APIs were like taking a travel plug adapter on holiday with you.
“There’s no need to buy a brand new appliance with the right plug attached, just allow the plug to convert the power source to suit your appliance and you’ve saved both time and money.”
Who uses APIs?
United Trust Bank has integrated its mortgage portal with many of its introducer systems through APIs, which offer speed and conversion benefits.
Buster Tolfree, commercial director of mortgages at United Trust Bank, said: “We also integrate with a number of other third parties such as credit reference agencies, anti-fraud providers and automated valuation models.
“Through these API-based integrations, we can speed up lending decisions and make life easier for ourselves, our introducer partners and ultimately the end consumer.”
Traditionally, to use SmartSearch’s AML (anti money laundering) check system, a broker or lender would have to go on to the SmartSearch website and input the name, address and date of birth of their client and run the check.
They would then download the information and save it on their own system.
However, Fraser Mitchell, technical director at SmartSearch, explained that now, if a broker has a client’s name, address and date of birth in their client file already, they can click a button on their own system and the API will run a SmartSearch.
Any results will appear directly into the client’s file in a PDF format.
Starling Bank offers its own API to other companies, such as investment apps and insurers, enabling them to easily integrate with its app and become part of the Starling marketplace.
Anne Boden, CEO and founder at Starling Bank, said: “This in turn gives our customers quick and easy access to a range of complementary products alongside their bank account.”
Nicola added that Knowledge Bank has the ability to link in with other systems, such as sourcing and CRM systems.
“This means the broker can enjoy a seamless experience finding the right lender and criteria for their client, while their findings can be imported straight into their CRM system against the client’s name, providing evidence of research.”
How do APIs benefit brokers?
“A broker can use an API to enquire about numerous lenders’ products through a single submission from the broker’s side,” explained James.
“In essence, this means they are able to submit the same case to several lenders through a funnel, instead of having to duplicate their work across individual lenders’ platforms.
“It saves them time and money, allows a quicker response and a wider net can be cast for the consumer.”
Danny Healy, financial technology evangelist at integration platform Mulesoft, highlighted that APIs allowed brokers to incorporate more services from more financial services providers, some of which they may not have been able to access before.
“This gives brokers access to a bigger portfolio of products, which they can offer at more competitive prices, ultimately offering better flexibility, choice and convenience for their customers.”
Sadiq Javeri, senior director of strategy and operations at Finastra, claimed that a potential example specific to brokerages could include enabling more accurate credit and affordability checks by using prospective clients’ transaction level information.
“Supplemented with resulting mortgage provider rates, this could lead to a more self-service, end-user experience of the mortgage broking and acquisition process.”
Alex Cardona, co-founder of API and online portal Codat, added: “Brokers can use APIs to get a better understanding of their customers' underlying data, reviewing a full set of historical data, whether that's from Companies House, their bank transactions through Open Banking or their management accounts through open accounting.
“Codat enables a number of tech-enabled commercial finance brokers to do this, together with mortgage brokers looking to improve their understanding of self-employed customers.”
Tony Coleman, cloud technology director at Temenos, said that mortgage and corporate finance brokers could make use of an active API economy to build better quotation and booking services.
“Rather than being bound to a small number of providers, marketplaces can be established which allow for [the] online comparison of credit availability and pricing.
“This kind of facility also encourages new brokers and new finance providers to enter the market since they can take advantage of increased market transparency and lower barriers to entry.”
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