Blog » MRS API

September 26, 2024

Financial Transaction Developer API: a strategic necessity

• Digital Banking
• Product
• Transaction Enrichment

4 minutes

The vast majority of financial institutions around the world are adopting financial transaction developer APIs in response to both the Mastercard mandate AN4569 and growing consumer expectations for transparency in their financial health. Initially adopted by banks, this technology is now extending to payment processors and gateway businesses, reflecting a broader shift in the industry. Through the financial transaction developer API, banks can deliver enriched and intuitive financial experiences, optimise operations, and remain competitive.

Financial API Solutions: Should Banks Build or Buy?

When choosing between developing a financial API in-house or purchasing from a leading provider, financial institutions face a pivotal decision. While creating an API for banks internally might initially seem advantageous due to standardised interfaces and outputs, it often underestimates the complexities of maintaining and evolving backend logic. As market demands and functionality expectations continuously evolve, in-house solutions can become increasingly costly over time. 

The real challenge is that backend logic is rarely static; it must adapt to changing market conditions and new functionality requirements. What appears straightforward on the surface can be quite intricate behind the scenes. While in-house teams may successfully establish the core functionality, the ongoing investment needed to keep the API updated and relevant can quickly outweigh initial cost savings, often making it more expensive in the long run. 

The next generation of transaction enrichment API

Examining the evolution of technology, the most common approach to developing a Financial Transaction Enrichment API involves using a set of data inputs to derive additional information, thereby enhancing the transaction details. Typically, solutions rely on web scraping to collect data from merchants, use MCC codes to categorise merchants, and apply business logic to extrapolate additional fields. However, this approach has inherent limitations. Websites, merchant details, and business logic are constantly evolving, which can make it challenging to maintain up-to-date and accurate information.

Financial institutions aim to address these challenges efficiently, but the ongoing investment required to adapt and evolve in-house technology can negate initial cost savings. Consequently, a more effective solution is a transaction enrichment API designed from the ground up to be continuously adaptable. This approach ensures that the technology evolves with changing needs and conditions, providing a more sustainable and future-proof solution.

Financial API ROI: Proven Results

Money is ultimately the key. Effective management of investment for maximum return is the primary goal. Transaction enrichment API solutions consistently deliver substantial returns on investment, with clear metrics to back this up:

• Reductions in customer service call volumes by 20% or more
• Improved app ratings by 10% or higher
• Increased consumer engagement by 15% or more
• Reductions of customer chargebacks of 20% or more
• Enhanced transaction accuracy leading to fewer disputes and chargebacks
• Higher customer satisfaction scores, reflecting improved user experience
• Streamlined internal processes, resulting in operational cost savings of 25% or more

Conclusion

Financial transaction developer APIs are essential for banks seeking to create intuitive customer experiences, enhance fraud detection, and optimise costs. Snowdrop’s advanced transaction enrichment API leverages Google Cloud technology, including AI and machine learning, to enhance transparency and deliver accurate insights. Banks, financial institutions, and financial app developers looking to provide users with detailed insights into their spending habits can benefit from using the MRS API ™ (Merchant Reconciliation System API). By evaluating available options and factors discussed, developers can select the best API to meet their needs and drive innovation.