Financial Data APIs

Financial Data APIs are definitions of interfaces through which financial data can be accessed and interfaced easily from one system to another and other systems. They enable banks and other financial institutions, financial technology firms, and third-party applications that support services including account consolidation, instant payments, and tailored financial services. These APIs are fundamental to open Banking since they ensure the exchange of data is safe and structured while at the same time improving customer experience and operations.

The Financial Data APIs Market is expected to grow with a significant CAGR of 19.2% during the forecast period (2024-2032). This is mainly due to the increasing number of open banking regulations, which require a secure exchange of data between financial institutions and third parties. Also, the higher dependence on real-time, accurate financial data for trading, payments, and analytics, fuels the market growth. The increasing popularity of the companies offering FinTech and new banking products and services means that APIs are needed for integration and further advancement. Similar to the use of AL/ML technologies in application development, API technologies also provide consumers with personalized solution packages of finance and risk analysis. Further, the concerns for quick and ease of access services have made the consumers demand API integration within organizations.

In June 2023, Akoya announced its partnership with Axway to help financial institutions tap into the power of open APIs and transform the way customer information is shared with third-party applications. Both companies have standardized their APIs to the Financial Data Exchange (FDX) standard, which allows for customer data sharing in a secure and transparent way.

• Based on the type, the market is segmented into cloud-based APIs and web-based APIs. Cloud-based APIs held a significant share of the market in 2023. This is mainly due to providing scale-ability and flexibility, and their costs are inexpensive thus helping companies to expand their service delivery without necessarily laying down hefty infrastructure investments. While more financial institutions are adopting cloud solutions, API plays a unique role in working with other services to enhance customer experiences. Solutions delivered from the cloud also mean that the solutions are deployed and updated more quickly, which encourages innovation. Moreover, companies incorporate cloud APIs because they help to increase company productivity and produce versatile and efficient applications for numerous clients. For instance, on December 13, 2023, Morningstar, Inc. (Nasdaq: MORN), a leading provider of independent investment insights, announced the launch of Direct Web Services, a collection of application programming interfaces (APIs) that packages Morningstar's data, research, and calculation engines for financial services firms to use in their digital solutions. Direct Web Services is complemented by a newly created global network of certified partners to seamlessly integrate API functionality for firms developing sophisticated websites and applications.
• Based on application, the market is segmented into banking, insurance, wealth management, and others. Insurance is expected to grow with a significant CAGR during the forecast period (2024-2032). The use of financial data APIs is quickly growing within the insurance industry to glorify customer experience and cut expenses. Currently, APIs facilitate the grouping of financial data by insurers, automate claims processing, and enable the customization of products. Through APIs, insurance companies can easily connect with third parties, for example, payment systems or fraud prevention services, to improve their digital sales. They also get real-time information from their clients for which they employ APIs to offer them details about claims status as well as policy changes.
• Based on the end user, the market is segmented into BFSI, IT and telecommunications, retail, healthcare, and others. The BFSI segment contributes to the large demand for financial data API due to the ability needed for convenient financial transactions. APIs allow banks and financial institutions to deliver various products and services like account aggregation services, digital payments, and loan processing at the customer's interest. It also encourages innovation via integration with startup fintech hence the development of new finance products. With increasing competition, API adoption helps BFSI sector players optimize and standardize as well as meet the legal requirements.
• For a better understanding of the market adoption of Financial Data APIs, the market is analyzed based on its worldwide presence in countries such as North America (U.S., Canada, and the Rest of North America), Europe (Germany, France, U.K., Spain, Italy, Rest of Europe), Asia-Pacific (China, Japan, India, Rest of Asia-Pacific), Rest of World. Asia-Pacific is expected to grow with a significant CAGR during the forecast period (2024-2032). The Financial Data APIs market in the Asia-Pacific region is expanding due to digitalization, development of FinTech systems, and an increase in the number of Smartphone users. Indian and Chinese governments encourage open banking environments and the use of safe API for data exchange. APIs are used by companies to deliver customized financial solutions, instant payment services, and international transactions to access the region’s financial demand. The continuous growth in super apps and embedded financial services in regions like Southeast Asia catalyzes the growth of API across the operational sectors. With increasing competition though, Asia-Pacific organizations seek out new opportunities and forge alliances to unlock the enormous potential that is still latent in the area.
• Some of the major players operating in the market include Yodlee, Inc. (Envestnet); Tink AB; Plaid Inc.; FactSet; Barchart.com, Inc.; Quodd, Inc.; Alpha Vantage Inc.; Morningstar, Inc.; Mastercard International Incorporated (Finicity); Bloomberg Finance L.P.