With the large drive in account origination towards digitisation and automation, web services have become increasingly critical in the originations’ process. To enable web services, ideally lenders should look to adopting an API hub. In this blog, we unpack API hubs and APIs available in originations.
What is an API?
An application programming interface (API) is a software intermediary that allows two applications to talk with each other. An example in credit is a loan originations system (LOS) and a credit bureau. To connect the LOS to the credit bureau these days one typically uses an API, this allows the LOS to make a specific request of the credit bureau including logging into the service and sending an ID number. The bureau in turn will receive this request, look up the ID number and deliver the data back to the LOS through the API. In setting up the API you are also able to determine what to do with the data you receive from the credit bureau (e.g. you may only want to use 20 fields of the 2,000 fields returned).
What is an API hub?
An API hub is software that enables you to configure all of your API calls in one location. This makes it easier to manage the APIs. API hubs also often come with pre-configured APIs meaning that it can be even quicker to connect into other web services.
As much as 2/3rds of the cost of an originations’ project can come from integration. Reducing integration cost is critical. The use of an API hub provides the opportunity to do just that.
To find out more about Principa’s API hub, BridgeSmart, featuring over forty APIs, get in touch with us.
Without an API hub, for each API service, integration needs to be built with the loans origination system and the API service. With the use of the API hub, integration with the loans origination system is built once. As well as this, the API hub should be enabled with a variety of common features required of APIs.
Features to look out for
Apart from enabling the service call, deploying service credentials and mapping the input and output data, the API hub should be equipped with other features too. Some of the features to look out for include the following:
- SOAP/Rest – ability to manage both SOAP or Rest APIs receiving XML and JSON object types.
- SQL integration – ability to do SQL look-ups which is particularly useful when using the API hub for internal look-ups.
- Encryption – the ability to manage both encrypted and unencrypted data with different encryption methods.
- Data types – the ability to manage the transfer of data, files and images.
- Data cache – the system should feature a data cache to prevent unnecessary multiple calls to a bureau. The user should control the retention period of the data.
- Workflow/process flow capability – some ability to manage the API call process or control the flow of actions and results.
- Sequential/parallel calls – ability to order multiple calls in a sequential or parallel manner, potentially triggering multiple API requests in parallel then waiting on response on all of them before continuing.
- Conditional processing – ability to interpret values from received responses in order to determine whether following API calls should be executed. This could save unnecessary network traffic (data) and even cost.
- Extensive call failure management – this will control what should be done if a call fails.
In the last five years, several APIs have become available to be consumed especially in the credit originations space. Some of them are very product-specific and some can be used across products. Some of them are listed in the diagram below and are explained:
- Credit bureau management – with a host of credit bureaus available, links to credit bureaus are critical and many lenders have multi-bureau strategies.
- Customer verification (KYC) – these services automate the customer verification process ensuring that the customer identifiers captured (e.g. ID, passport) match the actual number on the document itself. This is traditionally done manually, but with automated services now available this has changed.
- Digital signature – the signing of documentation is a laborious manual process. Enabling digital signature through one-time-pin has made the document signature process more seamless. There are multiple services out there that enable this.
- Vehicle bureau – the vehicle bureau holds data on vehicle valuations and details as to whether a vehicle has been stolen or is currently under credit agreement.
- Property evaluation – this allows the valuation of properties for mortgage applications.
- Debit orders – setting up debit orders including Debicheck.
- Account verification – ensuring that a customer has entered a correct bank account number is done through the account verification API.
- Proof of income – a variety of banks share bank statements data in a closed-user-group. There’s an API for this.
- Dealership/originators – dealer networks are point-of-entries for vehicle credit applications. Originators do the same for mortgages and unsecured loans.
- Fraud prevention – application fraud is on the increase and lenders need to check to see whether an application is on a fraud list, money laundering or terrorist list. Multiple services are available here.
The discussion about APIs used to be a discussion for the technical teams. However, as web services have become so integral to digital processes, so the discussion is one that business teams are having regularly as well.
The cost of a project can be dramatically reduced if an effective API hub is used. As such the ROI on an API hub is easily and rapidly realised.
Over the years Principa has developed the BridgeSmart API hub. We have used BridgeSmart to integrate with a number of web services in South Africa, across the rest of Africa, and into the Middle East. To find out more about Principa’s API hub, BridgeSmart, featuring over 40 APIs, get in touch with us.
Thomas has 18 years of experience in data science focusing in the EMEA region. His experience traverses multiple industries and disciplines covering analytics, consulting and software solutions for companies ranging from large banks and retailers to telcos and manufacturing operations. A large part of his experience comes from working with credit providers helping them harness the predictive power of data through the use of machine learning and decision tech. Thomas holds an MA in Mathematics from Edinburgh University