Three Different Types of APIs in Banking and Payments

Discover the differences between Open Banking, Accounts APIs, and Banking as a Service APIs (BaaS). Get started with Narvi's Accounts and BaaS APIs.

In rapidly evolving fintech, APIs have emerged as the backbone of innovation, enabling seamless communication and data exchange between financial institutions, businesses, and consumers. We will delve into the intricate world of payments within the fintech realm, shedding light on the three distinct types of APIs that power the financial transactions of the future:

Open Banking API
Accounts API
Banking as a Service API

What is API?

API, or Application Programming Interface, enables different software systems to communicate and interact seamlessly. It provides a set of predefined options for developers to choose from, allowing them to access specific data or services without needing to understand the underlying code.

The three different types of API

When it comes to banking, there are three types of APIs that take the spotlight. Let’s delve into them:Open Banking APIOpen Banking APIs came about as a directive from the EU as part of the PSD2 legislation. This legislation made it compulsory for every bank to make their accounts available via API, aiding fintech companies and other third parties to develop innovative financial products and services. Open Banking APIs are a technological solution that aligns with PSD2 requirements and there have been many successful use cases. One example is making online purchases easier and verifying information for people like lenders or other online solutions.However, Open Banking API has been a challenge to implement in the Eurozone. This is because the Eurozone has thousands of banks and is therefore quite decentralized in terms of banking. They all have different processes and therefore it is hard to create a solid framework. However, some third-party providers have developed innovative financial products and services to aid this implementation such as Token. More and more banks are also gradually opening up their APIs in the Eurozone and we will expect to see more of how Open Banking API can develop the financial landscape.Currently, Narvi Payments doesn't support Open Banking APIs. We offer Accounts and BaaS APIs for our clients.Accounts APIAccounts API allows third-party financial service providers to access and retrieve account-related information from a user's bank account with their consent. It basically automates everything that is there in an online banking application but it can be done via an API. Accounts API is particularly used by modern banking fintechs such as Narvi because this makes your user experience seamless. Once you are approved as a customer, you can get access to your account via an online banking portal. After creating your own API key and integrating the account with accounting, payroll, expense or maybe even investing software, you don’t have to continuously log into multiple banking applications.Banking as a Service APIBanking as a service (BaaS) is a much more complicated type of API compared to Accounts API. BaaS API not only has basic API features, including instructing payments and receiving transaction history, but it also has more API endpoints like generating user accounts and IBAN accounts. Plus, you are able to do, for example, ID verifications and the whole onboarding process for a private client or a corporate client using this API.For example, the banking as a service API is great when you want to build a neo-bank or you’re building a fintech product for end customers and you need to have all the processes from the onboarding, accounts management, and wallet management in one place.

How they differ from each other

The biggest difference between the Account API and the Open Banking API is that, for Account API you have to have an account with that financial institution or bank. For example, only Narvi customers can use the Accounts API. This provides more flexibility than the Open Banking API as it allows the customer, especially large ones like marketplaces, exchanges, or financial institutions, to fully automate the banking experience and integrate it into their system. This allows fuller integration of the online banking application but in their own marketplace and it doesn’t have the limitations of the PSD2 Open Banking API. The Banking as a Service API is really only useful if you are trying to become a fintech or launch a payment service for end users. A Banking as a Service API is great for this as it includes onboarding processes, IBAN generation, and much more. It is a more complicated API and provides a higher risk for financial institutions but it allows you to build fintech products.

Narvi Payments and APIs: Use Cases

Using Narvi for a business bank account? Narvi provides a service for Backend APIs that empower you to seamlessly interact with and manage your data within our platform. Review Narvi API documentation, access Node.js and Python Integration Libraries, learn about authentication and API key generation, as well as the endpoints and limiting access to your accounts.Furthermore, Narvi empowers you to generate unlimited real or virtual IBANs, all wrapped in a modern, sleek, and user-friendly interface that sets the stage for a truly exceptional financial experience.Building your own fintech? Use Narvi’s Banking as a Service APIs to automate and build your solution. Our API-first approach allows you to gain access to our seamlessly embeddable fintech system, coupled with dedicated support and guidance for a hassle-free integration process. Our white-labeling options enable you to put your brand at the forefront, while our fast clearing on the SEPA system ensures rapid, efficient transactions.

How to get started with Narvi Payments APIs

As a business banking client, to get started with Narvi's API integration, follow these simple steps:1. Business owner — sign up for Narvi: If you haven't already, sign up for an account at Narvi.2. Consult the stakeholders in your company about their needs, the software they use and whether it supports API integrations.3. Developer — review documentation: Familiarize yourself with our API by exploring the Narvi documentation.4. Install the Node.js Library: If you're using Node.js, install our integration library from npm using the command "npm install narvi"5. Authentication: Ensure you have the necessary API credentials for authentication.Authentication and API key generationAuthentication is a crucial step in interacting with Narvi's Backend API. To ensure the security of your data and API access, we use API keys and private keys that are generated within your Narvi account.Here's how the authentication process works:1. Sign in to your Narvi account.
2. Generate API key: To generate API keys in the app, select "Developers" from the left side menu and go to the "API" tab. You can also use this link. These keys will be used for authentication in your application. Only admin users have access to the "Developers" tab.
Important: The API key now grants access and permissions within the context of a single entity, which is especially important if you manage more than one company. You can set the permission level to either read-only or full access.
3. Securely store your keys: Once generated, ensure that you securely store your API keys and private keys. These keys are sensitive and should not be shared publicly.
4. Use your API key for integration: Read the docs listed above to see how to use your API key and private key to integrate your application, either directly connecting to our REST API, or by using provided node.js Narvi library.By following this authentication process, you'll have secure access to Narvi's Backend API, allowing you to interact with our platform and access your data seamlessly.If you encounter any issues with authentication or need assistance in generating and managing your API keys and private keys, please don't hesitate to reach out to our support team.Your security and data protection are our top priorities, and we're here to help you maintain the integrity of your Narvi integration.Narvi's API offers a wide range of endpoints for different functionalities, including account management, data retrieval, transaction creation, and more. Refer to our documentation for a complete list of endpoints and their use cases.API keys are created within the context of a single entity (company). During the creation of the key, you can select the permission level: read-only or full access.

Thank you for choosing Narvi for your backend integration needs. We look forward to seeing the amazing applications you'll create using our API and Node.js integration library. Happy coding!

Published November 8, 2024Author:

Neil Ambikar, CFO and Co-founder of Narvi Payments.