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Automation and integration: The key to future-proof consumer lending

A consumer holds a mobile phone in one hand and a credit card in the other while sitting on the floor leaning against a couch


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  • Consumer lenders are embracing APIs to streamline operations, provide a better customer experience, and offer new products and services.
  • As open banking and embedded finance grow in popularity, APIs will play an essential role, as APIs enable financial institutions to integrate with non-financial service providers, creating a dynamic and growing ecosystem offering greater value to customers.
  • Choosing a communications platform that allows API integrations is a great way to future-proof a financial institution’s communications system.

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By its nature, consumer lending is a conservative sector, which means that sometimes it has been slow to adopt new technologies that are spurring growth in other industries.

In recent years, however, the pace of technology adoption has increased substantially, accelerated in large part by the process changes required during the global pandemic, along with the growing consumer demand for better customer experience.

Forward-looking lenders now understand the need to embrace technologies that automate processes and ease integration challenges. The use of APIs falls firmly in that category.

What are APIs and why do they matter to consumer lending?

An API—or application programming interface—is software that allows different applications to communicate with each other directly. APIs enable other software applications to work together quickly and seamlessly.

To maintain a reliable and efficient consumer lending system, it’s crucial to have API monitoring in place. By continuously monitoring APIs,  any issues related to authentication, redirects, or returned content can be detected early on, allowing the development team to take immediate action and resolve them before they impact the overall performance of the lending process. 

Types of APIs

APIs link to a lender’s pre-existing technology to enable communication and data transfers. APIs typically come in three forms. They are:

Private APIs

Commonly used internally by banks and standard financial institutions, private APIs boost the efficiency of operations and are often viewed as essential tools for lenders and other financial services stakeholders.

Partner APIs

In addition to allowing engagement between banks and third parties, partner APIs enable channel and product expansion and permit third parties to create loan documents. They also allow banks to automate loans, which boosts efficiency. This makes them very important for consumer lending purposes.

Open APIs

As their name implies, open APIs are APIs that are freely available for use by the public at large. Lending banks are particularly interested in open APIs because they facilitate open banking. Going strong in the UK and picking up some steam in the US, open banking relies on using open APIs to share consumers’ banking and other financial data with third parties such as fintechs.

Open APIs make it possible for banks to make this information universally available to any other bank or partner that uses APIs. As banks pursue more partnerships with fintechs to offer expanded services to their customers, the use of APIs will play a significant role in easing the process.

How lenders use APIs

Lending financial institutions use APIs to improve the borrower experience, lessen their costs and heighten security. For example, a consumer lender may provide an online portal via partner APIs for loan applicants to use when submitting applications and supporting documentation.

Partner APIs can speed the processing of loans and provide additional security for sensitive customer data. In many cases, partner APIs are used to produce the loan documentation required for processing. By accelerating and automating some of the loan process, lenders gain the ability to close more deals. For consumers, partner APIs that facilitate automation mean that funds are disbursed more quickly, improving the customer experience.

A mobile phone screen and a laptop screen display the same financial data

APIs enable networked accounts. By using the data derived from networked accounts, lenders can get a more accurate picture of a consumer’s financial situation. That clearer picture enables lenders to offer the types of lending products that would be most suitable for the consumer.

APIs enable embedded finance

Another significant way APIs impact lenders is by enabling embedded finance. Embedded finance refers to the use of financial tools and services by non-financial providers. For example, Shopify Capital partnered with WebBank to offer working capital loans to its merchants via API integration. Another example is the QuickBooks Financing Line of Credit, which provides faster access to small business loans using the business’ Quickbooks Online data to apply for loan offers quickly.

For consumer lending, embedded finance presents a huge opportunity. Embedded finance allows a consumer to instantly take out a consumer loan on a digital platform to pay for a purchase in the moment. Consumers get a frictionless purchasing experience and consumer lenders get new business. It’s a win-win situation.

Embedded finance is a growing market. It is estimated that, by 2025, embedded finance services will be worth almost $230 billion in revenues, a tenfold increase over 2020 ($22.5 billion), and the stock market value of companies in the sector could reach $1 trillion—all enabled by API integration.

APIs are now having an increasingly significant impact on the global banking system, and things look set to only grow further from here…By enabling financial institutions to connect with businesses and consumers, to transfer information securely and conveniently, and to boost the scope of products and services they can offer to a potentially wider customer base, APIs could ultimately have a profound transformative effect on the future of banking.

International Banker, regarding the growing use of APIs

Cloud-based communications platforms and API integration

API integration also plays a major role in modernized, cloud-based communications platforms. Via APIs, such platforms can be integrated into existing business systems, giving lenders unprecedented access to communication and collaboration tools right within the apps they already use every day. 

For example, when speaking with a borrower, it is vitally important to have good and accurate information available to all participants—loan officer, underwriter, customer service agent, etc.—in the process. With API integration between the CRM tool, the unified communications platform, and the loan origination system, when meeting with a customer, a loan officer would not need to input information into multiple systems for the loan application, as the necessary information would automatically flow between both systems. This creates more efficient processes, reduces data errors, and enables better communication externally with the borrower and internally with other employees or departments. This creates a more streamlined process and a better customer experience for the borrower.

Choosing a communications platform that allows API integrations is a great way to future-proof a financial institution’s communications system. APIs enable lenders to take advantage of future technologies as they become available,  so the lender is always working with a modernized system.

For example, RingCentral, a market leader in communications for the financial services industry, offers RingCentral Embeddable, which allows organizations to embed RingCentral message, video, and phone into existing business applications in as little as 15 minutes. RingCentral also offers an extensive API Library that continues to grow.

RingCentral powers connection

As a leader in global communications, RingCentral offers financial institutions cloud-based communications systems on the cutting edge of technology. Our products help lenders integrate the tools and applications they need to stay on top of tasks, communicate effectively with customers and employees, and future-proof their communications. To learn more, request a demo today and see how our platform works.

Originally published Mar 08, 2022, updated Jun 15, 2023

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