The journey of APIs: Enabling seamless interconnectivity and financial accessibility

By Kanhaiya Gautam, Chief Technology Officer, Lentra

APIs and the Digital Economy

Application Programming Interfaces, well known as APIs, have become the cornerstone of technological progress, driving interoperability and innovation. From the rise of smartphones in 2011 to the digital-first services we rely on today, APIs have enabled businesses to deliver seamless experiences in the banking industry particularly lending, where APIs have simplified processes, increased accessibility and meet the demands of a growing tech-savvy population.

Post 2010: Smartphones, Apps and the Demand for Interconnectivity

The early 2010s marked a pivotal moment in technology. The rise of smartphones connected millions of people online, driving demand for application based ecosystems and real-time interconnectivity. This rapid technological adoption didn’t just reshape how people communicated, it also changed consumer behavior- everyone started buying goods and services through the same device including financial services product & services.

With a growing number of tech-savvy users, there was a surge in the demand for financial services, particularly lending. People started taking loans more frequently, whether for education, housing, or small businesses. Traditional banks struggled to keep pace with this demand, especially with consumers expecting faster, app-based services. APIs emerged as a key enabler, allowing financial institutions to meet these expectations by integrating digital lending solutions into their systems.

APIs Revolutionising Loan Accessibility :

1. Streamlining Loan Processes:
   APIs facilitated the digitisation of the loan process. They allowed platforms to integrate with banking systems, automating tasks like credit assessments, document verification, and loan approvals. What once took days or weeks for banks can be accomplished in minutes.
2. Expanding Financial Inclusion:
   With APIs, financial services became accessible to a broader audience. Apps could connect to databases to assess creditworthiness instantly, enabling even individuals without traditional credit histories to secure loans.
3. Open Banking and Real-Time Decisions:
   APIs powered open banking initiatives, enabling fintechs and banks to collaborate. This collaboration gave consumers real-time access to loans via mobile apps, empowering users to make informed financial decisions on the go.

Standardisation and Security: Building Trust in Digital Lending

As lending moved online, the need for secure, standardised APIs became critical. API gateways ensured secure data sharing between systems, protecting sensitive customer information. These advancements provided users with the confidence to adopt digital lending solutions, accelerating the growth of the sector.

The API-Driven Lending Ecosystem Today

APIs are now at the heart of digital lending platforms, enabling co-lending, Buy Now, Pay Later (BNPL) schemes, and embedded finance. With APIs:

• Borrowers enjoy instant approvals through integrated credit checks.
• Lenders leverage AI-driven insights via API integrations to make smarter lending decisions.
• Customers benefit from frictionless experiences, accessing loans through apps they already use daily.

APIs are breaking barriers for India’s underserved populations by enabling faster, data-driven lending. Lending platforms use alternative credit scoring APIs to assess telecom usage, utility payments, and social behavior, helping rural SMEs and gig workers access loans without formal credit history. Farmers can now secure crop loans within minutes through agritech apps with lending APIs. The Account Aggregator (AA) framework further speeds up loan approvals by securely sharing financial data via APIs, cutting paperwork by 80% and reducing approval times from weeks to hours.

Neo Banking – The next big thing for API 

The number of users in Indian neo banking is expected to grow at the CAGR of 14.61 % from 2014 to 2028 and APIs are going to be the backbone of this. APIs can enable this banking system to create a wide array of services ranging from opening a banking account to getting loan disbursed within minutes. The role of API in banking services is pivotal as it bridges that gap of interoperability in two different systems. It is evident that neo banks are going to grow as today’s consumers want everything at their fingertips.

APIs are more than just a technical tool—they are a powerful enabler of financial inclusion, breaking down barriers for India’s underserved populations. By leveraging alternative data, streamlining processes, and fostering innovation, APIs are transforming the way credit is accessed and disbursed. As these technologies continue to evolve, they hold the potential to create a more inclusive and equitable financial ecosystem, unlocking opportunities for millions and driving India’s economic growth forward.

The journey has just begun, and the possibilities are limitless.