How Does Open API Help Fintech Financing or Digital Lending Providers in Indonesia?

The general public used to have a negative perspective on loans. Many utilized financial service such as loans only for expensive purchases such as house and car payments. In recent years, there has been a shift in attitude towards personal loans. Now, there are many digital lending services offered by fintech (financial technology) financial institution. borrower can now take small loans for whatever needs they have. The most notable upgrade is how fast those loans are processed. This is where open API plays a significant role.

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Traditional lending vs. digital lending

The key difference is documentation. With traditional lending, customers are expected to fill out pages of forms, not to mention the endless photocopies of ID cards and other documents required. Meanwhile, fintech financing services have managed to simplify this old regimen. Customers only need to provide their name, national ID number, and address. They also can take photos or scans of the documents. The digital lending process is paperless, time efficient, and values convenience.

What about the verification process? In this aspect, P2P (peer-to-peer) digital lending still excels. Thanks to API implementation, now lending companies can access helpful insights such as the customers’ credit history and source of income in a matter of seconds. This dramatically reduces the processing time during loan applications, which might take weeks for traditional lending companies to finalize.

Apart from the amount of time (and paper) consumed, accessibility is another difference you can notice. You may have heard about pay later services, a relatively new product from the digital lending industry. This product relies on APIs, which enable customers to take out a loan whenever and wherever they need it. Customers can do so by using a mobile app. Moreover, APIs and digital lending services can reach out to people who live in secluded areas, promoting financial inclusivity.

How open API helps fintech financing

Many assume the internet is the only infrastructure needed for all digital lending services. In reality, an open API is just as essential since it allows access across platforms. Open APIs create a new ecosystem that integrates data from multiple lenders, helps invent new products, and customizes point-of-sales. Let’s break down the ways API facilitates fintech lending financial institutions.

1. Open API shortens the overall lending process

From application to credit underwriting, open API makes everything more seamless. Every application accepted by the company will be processed automatically by the API. This guarantees a consistent flow, even if each customer uses a different platform (mobile app or website) to apply for the loan.

Then, the open API algorithm will automatically collect customer data from various sources. The data will be sent to the company’s internal system, which will help credit underwriters to finalize the evaluation.

Lastly, open API enables the lending company to transfer funds directly to the customer’s account. Therefore, the customers can receive their loan a few minutes after sending the application.

2. It enhances credit verification

The verification process usually takes the most time as the company wants to avoid fraud of any kind. The know your client (KYC) check is mandatory and cannot be skipped. But with an open API, many fintech financing company can detect fraudulent activities immediately. If a customer was flagged by another lending or banking company, the algorithm will take notice and notify the system.

3. Creating a digital experience for customers

Anytime and anywhere, an open API allows digital lending companies to integrate their products with other innovations. One prime example is the collaboration between pay later services and e-commerce sites. Customers can shop to their hearts’ content and pay in installments using the pay later option. Furthermore, open API improves customers’ satisfaction and possibly creates a new revenue stream for a lending company.

Now that you understand more about open API’s role in the fintech financing scene, it’s time to know what API is best for your business. Find your solutions in Ayoconnect, Southeast Asia’s largest open finance platform trusted by many notable companies. Embed finance features in your platform within weeks and grow your transaction counts now with Ayoconnect!

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