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API Infrastructure Platform- Giving impetus to Startups

It was now an old story when VISA bought over Plaid at a significant amount.  It brought every-body attention to the core technology infrastructure of Fintechs. Plaid started as a technology provider for building infrastructure APIs in financial services space to connect customers, financial institutions, and developers (startups). Slowly transformed its role as a platform enabling applications to connect with the customer bank’s account.

It developer-friendly infrastructure and intelligent tools that give everyone the ability to create amazing products that solve big problems. Plaid would have enabled more than 2600 Fintechs and developers.

 

A similar story came up last month when Galilio was bought over by SOFI. Consumer financial services platform SoFi acquired payments and bank account infrastructure company Galileo for $1.2 billion. Galileo is mainly a payment processing platform that powers payment functions for various Fintechs.

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Source: https://www.galileo-ft.com

The other notable such platforms are Railsbank, Tink, Synapse, and many more, which are providing API enabled technology infrastructure across banking functions or to specific areas. This powers startups to hook into their infrastructure and start operations.

On India side story on the platform, Setu is one notable example in financial services space, which enabling various startups in India through integration with its APIs stack. Setu has already built an API stack for collection management and lined up other products to power startups.

Setu has recently raised USD 15 million (INR 110 Crore) in a Series A financing round led by Falcon Edge and Lightspeed Venture Partners US along with existing investors Lightspeed India Partners, and Bharat Inclusion Seed Fund.

 

These platforms or also known as Infrastructure API provider or API enablement Technology are playing a significant role in success stories of Fintechs and startups.  Developers are their prime target as it enables developers to pick up available APIs and plug into their products. There is significant interest from investors towards these companies. It is mainly because of their ability to fast track and power startups.

 

Some broader areas where such platforms focus on power startups through their core capabilities.

Provide APIs with sandbox

Startups or Fintechs need supporting ecosystem where they can conceptualize and build their products. At times, it requires them to reach out to multiple APIs providers to help them in creating prototypes. Fintechs also are not too clear on the working model to support their ideas, and there may be some tweaking would require to finalize the solution. These platforms service providers make available sandbox environments with working APIs for startups to plug and play and create a working model.

 

Provides quickly deployable APIs solution for Go to market

Post building prototype and development of solutions, Startups may take a longer time to hit the market with its services. Go to market depends upon coordinating with banking institutions, closure of contractual arrangements, and many other factors. Platform enablers will have base Infrastructure ready with all necessary checks and balances, which allow Fintechs to launch products in the market quickly.

 

Scalable infrastructure

Startups may have visibility on the growth of their venture, but sometimes, the market surprises them with sudden upwards push, which would require good latency and uptime. Though, Fintechs have adopted cloud and microservices architecture very well to support scalability while there could be a concern on backend API infrastructure. These platform plugs in this gap to provide end-to-end scalable API infrastructure for startups.

 

Package solutions for startups to bundle or couple their suite of services

Usually, Fintechs start with few services from their platform, which allows them to fine-tune the entire process and build a scalable business. As part of growth strategy, Fintechs decided to expand their service portfolio, and their integration with such APIs provider platform helps them to hook up new services API and test out before rolling out services.

 

These API Infrastructure provider has become an integral component to Fintech ecosystem as they play the role of enabler. Their growth would continue to evolve as more and more companies work on Open Data and Open API framework. Though India has not seen many of such Financial Services API platforms, the ecosystem would surely need more for better innovation and faster product launch. Recently launched Account Aggregator may lead to the genesis of such platforms.

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Photo by Markus Spiske on Unsplash

 

Shashank Shekhar

Head of Consulting, The Digital Fifth

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