How financial APIs unlock value across the lending business
Published November 16, 2023
Make no mistake, API-based access to financial data has the potential to transform a lending operation. Success depends on believing in the big picture, and then getting data to the fingertips of the right teams.
We engage with various stripes of lenders, characterised by a wide range of services, target customers and business models. The vision of working with financial APIs to access real-time financial data, such as accounting or bank data, is a common starting point for most lenders - whether they're banks or challengers.
Where the roads diverge is the ambition level of a given lender to actually make data a strategic asset. It's normal to have a siloed approach while testing and launching; for instance, giving credit agents access to better datasets and minimising manual tasks. However, in their strategic planning, we encourage lenders to look far beyond one single team in their journey to become more data-driven.
The reason is this: the true unfair advantage of API-driven lending comes from having a 'holistic' approach to data. Looking at the long-term perspective, financial data that's delivered in real time helps lenders to:
- Make informed decisions
- Develop smarter services
- Make customers happier and more successful
- Identify avenues for further development
... what could be more important than these things, as far as improving lender performance?
But changing how an organisation works and thinks is among the hardest things out there. One key is to establish efficient ways to distribute data-driven insights (or just categorised data) across teams and through the right channels. So that it becomes the lifeblood of any decision, service or interaction - both internally and externally.
Easier said than done, of course. But this ambition level is crucial if you want to begin to unlock the full gains of API-driven data access, slowly but surely. A good starting point is understand the ways in which data can be utilised by various teams.
Sales. With an up-to-date understanding of potential customers, sales reps can know whether they’re spending time on the right cases. The best way to gauge the ‘sales-readiness’ of a customer is being connected to their cloud-based business system. Moreover, if salespeople can monitor customer performance continuously, new upsell opportunities can be identified.
Credit. The credit team gains the most obvious benefit from real-time financial information. Credit agents can become more efficient in their work, and gain confidence in each decision, by having relevant data at their fingertips. By subscribing to notifications (when certain financial events occur), they are prepared to take action on cases before it’s too late.
Alignment between sales and credit. Credit and sales aren’t always on the same page when it comes to approving applications, setting credit limits, or assessing risk. Provided that both teams can access accounting data, they will have better circumstances to find alignment. This way, the organisation can get the best of both worlds: grow faster, without adding undue risk.
Product. Through a feed of real-time data, product managers are better equipped to design tailored and ‘connected’ financing products. In practice, this could mean that those customers who share data are offered discounts, tailored terms and conditions, and the opportunity to top up their loans without unnecessary administration. These features need to be built into the user journey, and seamlessly integrated into the day-to-day processes of sales and credit.
Data science. When you have access to high-quality data, it means there will be new opportunities to utilise data science for better performance throughout the lending lifecycle. For instance, data science can aggregate data on the portfolio level to find interesting patterns.
Customer support. Lenders often underestimate how important customer service is to borrowers. Having a personalised approach to service is what customer loyalty is made of, and the best way to achieve this is to have the latest information available. That way, your customer service reps are equipped to become financial advisors.
Executive level. It’s ultimately up to a company’s leadership to decide the extent to which real-time data will be implemented in the offering. If there’s a long-term strategy in place, it’s more likely that real-time data will be at the heart of the company’s processes – leading to improved financial performance over time. This strategy is predicated on having a seamless way to connect customer companies as part of the onboarding process.
Monto was founded to enable any type of lender in Sweden to unleash the potential of real-time data in their processes, through one single API.