Posted by MeridianLink | July 15, 2020

What Is an Open API and How Does It Help Evolve Digital Lending?

Digital lending technology is ever-evolving and it can be difficult to keep up with the latest must-have features. This is where the open API functionality within digital lending technology can help position a lender to evolve with the growing needs of the digital borrower. The blog below will cover the following topics:

  • What is an API?
  • What is an open API?
  • How does a financial institution utilize APIs?
  • What are the benefits of having an open API for digital lending?

To learn more about APIs and how they work to enhance digital banking, please read the complete blog below.

The concept of digital lending and innovation within financial institutions is ever-evolving. Ten years ago, a partial online deposit account application on a bank or credit union website was considered innovation. And for the time and potentially the size of the financial institution, this action was considered innovative, but today it is simply unacceptable. That’s the tricky thing with innovation, it’s an ongoing concept.

Choosing the correct digital banking technology is an important component to digital lending success, but choosing a product is difficult. And the looming fear that there might be a better product on the market is always in the back of every admin’s mind. The reality of technology is there is no one stand alone product that can do everything a financial institution needs. This is where APIs come into play, they enable products to continuously be innovative and customizable to the unique needs that may not be ideally met by one specific product.

What Is an API?

An API, which stands for an application programming interface is a software intermediary that allows two separate pieces of technology to talk to one another. Unknowingly we all use APIs every single day. APIs are specific codes built to merge applications, so we can’t actually see them, yet we experience their benefits daily. For example, if you’ve ever used the weather application on an iPhone, you’ve probably noticed a small logo in the bottom left corner that states, “The Weather Channel”. This is because Apple does not have its own weather forecasting capabilities; instead it utilizes an API that connects the weather app to The Weather Channel and transmits that data directly into the weather app.

Banks and credit unions use APIs on a daily basis. APIs allow financial institutions to pivot to the evolving needs of their consumers and allows them to be more innovative with their digital banking efforts. The API functionality is what allows digital banking capabilities like mobile check deposit, bill pay, and the transfer of money from one account to the other.

Not all digital lending technologies have the same API capabilities, yes they must have some level of APIs to function, but it may be limited. It is ideal for digital lending software to have an open API. An open API is a publicly available application programming interface that provides developers with programmatic access to a proprietary software application or web service.

How do Lenders Benefit From an Open API?

An open API within digital lending technology gives developers of other supporting products the ability to create connections into that software and seamlessly create new functions to the existing application. Like mobile phone applications enhance the smartphone and help users easily complete all needed tasks, banks and credit unions can customize their point-of-sale, by utilizing a digital lending product that has an open API feature. An open API within digital banking has many benefits, including the following:

Process Improvement

An open API functionality will allow your digital lending front end (point-of-sale) to connect to your loan origination system or deposit account origination system. This means that every single application that is processed within a financial institution utilizing this API will have the exact same process applied to it. Consistent processes save so much time for branch staff and make staff training significantly less complicated. Additionally, an open API allows for financial institutions to utilize third-party vendors of their choice instead of a small pool of allotted options provided by the digital banking vendor.

Digital Consumer Experience

An open API allows for financial institutions to integrate with services that will enhance the digital lending experience. These integrations can provide application pre-fill opportunities from the borrower’s driver license or mobile phone and save significant time. Additionally, for more complex digital lending procedures like mortgages, there are integrations that help digitally connect multiple parties for the eClosing process and seamlessly feed information into the back-end, creating an unbeatable digital lending experience for all loan types.

Enhanced Credit Verification

An API functionality is used to create a connection between the digital lending system and the credit reporting agencies, in order to verify the credit of the borrower. With an increased number of credit reporters and reselling agencies, it can be confusing to connect to all of them or to know which ones to connect to. There are APIs that have the ability to connect to one service that will create customized response layouts, merge technology, and attribute data in order to simplify this credit reporting process.

The best way to position your financial institution for continuous growth and innovation is by utilizing products that will allow a wide range of integrations through an open API. This gives banks and credit unions the keys to customize and have the latest digital lending capabilities.

MeridianLink CreditAPI

MeridianLink® CreditAPI is the industry standard for complete and easily merged credit reports as well as verificationml_smartapi_ds_img services. Our merged credit reporting data and verification services give customers the ability to provide instant responses to borrowers, access a large provider network and create custom reports while minimizing risk and institutional liability with offsite storage capabilities.

MeridianLink Portal

MeridianLink® Portal allows financial institutions, regardless of size, to easily expand existing lending and deposit account origination platforms to online consumers while ensuring control of the entire online application experience. From the ability to determine which loan and deposit account applications you want to make available online, to customizing the look and feel to match your existing web presence. MeridianLink Portal has hundreds of configurations available to help tailor your online application process to meet your business objectives.

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