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The API Era of Finance

March 31, 2022 | 0 min read


Finance is at the beginning of a third era — the API era, according to Brett Allred, Chief Product Officer at MX who recently spoke at the 11th annual FinTech Festival. 

In the same way that technology has evolved and software is now at the core of everything from cars to refrigerators, the financial industry has gone through several eras of evolution. 

The first era of finance was the Relationships era. People did their banking in branches. They wrote checks. They brought cash to pay back their friends. Then, we entered the second era of finance — the Digital era. Financial services companies started to look like software companies. Digital banking became preferred over going in person to a branch. People now pay bills online and send money to their friends via payment apps. They take pictures of checks and deposit them using mobile deposit technology.  

Now, we’re seeing a third era of API Banking on the rise. API Banking will become bigger than online or mobile banking. All kinds of banking services will be made available via APIs and it’s happening right now. In the past 2 years, top financial institutions have been releasing financial APIs to power consumer experiences. A 2020 McKinsey report found that 75% of the top 100 banks globally have made public APIs available. 

Opening a bank account, transferring money, and downloading statements will now be like provisioning a server. You make an API call. However, many financial institutions still have work to do to make API banking a reality. A recent Cornerstone Advisors report shows that only 36% of banks and 61% of credit unions have already deployed APIs. 

Complex and siloed legacy infrastructures and technologies are hindering innovation and collaboration. It’s a closed environment and we need to open it up. Embracing APIs is critical on the path towards Open Finance, which gives us the ability to access and act on financial data to build personalized experiences, increase the pace of innovation, and drive industry collaboration. 

You can hear more from Brett on an episode of the Fintech Cafe podcast. In this episode, he shares his background, discusses President Biden’s recent executive order impacting the space of open banking and how MX is operating in the space.

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