Unearthing API Testing & Its Role In Open Banking

The financial or banking services sector is being revolutionized by the unrestricted banking movement, which is technology-driven.  Sticking to the notion, banks are expanding their capabilities in terms of the client experience by incorporating services and goods provided by other vendors.  

Open banking and its effects on the financial landscape are already creating a buzz in the fintech sector by enhancing financial services.  

According to the Open Banking Implementation Entity (OBIE), more than 1 billion successful API requests were performed by account servicing payment service providers (ASPSP) in May 2022, up from 410 million in May 2020. Users of open banking have significantly benefited from it in a certain way. It is suggested that:  

• 40% of people say that open banking has helped them make better financial decisions.  

• 31% of respondents indicate an increase in payment options.  

• Better borrowing opportunities are indicated by 23%. 

Since BugRaptors is working as a quality assurance service provider for a long time, this blog, will aim to highlight how API testing is enhancing open banking, its importance, its applications, and the future.  

Let's Begin! 

What And Why Open Banking?  

"Open Banking" describes banks' expanded ability to safely share their customers' financial data with outside sources using APIs. By offering customers more control and choice over their funds, open banking seeks to improve the overall customer experience.  

Open banking is an available data paradigm in which client information is shared, with their consent, with various stakeholders within the banking industry. Third-party providers can access these data through transactions, fund checks, the start of credit transfers, and other actions.  

Consumers formerly had only access to the goods and services provided by banks. Open banking allows customers to access various goods and services offered by multiple banks and financial institutions. 

Not only this, but it also enables the sharing of customer data with third-party service providers, allowing them to proactively create and provide new, specialized products and services that address particular consumer demands. Customers benefit from a more customized experience catered to their specific requirements.  

Importance Of API Testing in Open Banking 

For Consumers  

• Open APIs allow banks and other apps to integrate, providing users with more alternatives like rapid payment options.  

• Giving clients more say over who can access their data.  

• Increased competition will result in customers receiving better services at a lesser cost.  

For Banks  

• APIs support banks in their journey toward digital transformation. We can't overlook the importance of digital transformations for all domains, wherein open banking is no exception.  

• Reduce the necessity for developing or investing in resources by supplying services from other applications and businesses to increase the bank's value chain.  

• By eliminating duplicate banking procedures, it will be possible to: Improve operational efficiency; Offer tailored goods as more personal information becomes available. 

For SMEs  

• Giving customers access to various services, including integrated accounting and tax management, and virtual spending management. 

• Fintech businesses can customize their offerings by using their customers' financial information. Open banking has enabled fintech companies to provide customers additional value. 

Beyond the customers, open banking has several advantages to dissipate. Before we begin to explore the importance of the concept, let us know about some of the necessary open banking testing techniques: 

• API Testing: This test guarantees that an API operates as intended and gracefully responds to errors by returning the desired status codes. In other words, it ensures that banking APIs are working as expected and efficiently handles failures by responding with the respective status codes  

• Integration Testing: No matter how complex the application or the underlying technologies are, integration testing ensures that all touchpoints are accurately evaluated to find any bottlenecks.  

• Data Validation: Several different forms of data can be accessed through an interface in a financial environment. This can include information about the customer or account, deposit or loan data, loan details, transaction information, and real-time or end-of-day batch process information. Data type validation, field length validation, and data validation in the response body should all be done thoroughly on the input data.  

• Performance Testing: Performance testing, as the name suggests, aids in identifying the limitations of a system and applications under realistic loads. Additionally, it aids in optimizing resource usage while ensuring that the application is reliable, scalable, and consistently performs as expected. Considering aspects like response time, scalability, downtime, and infrastructure expenses, this testing ensures the application operates as smoothly as possible. Some of the outcomes of leveraging performance testing include: 

• Fixing response time for every transaction in the application  

• Overcoming network delay between the client request and server response  

• Getting over drawbacks due to hardware like CPU maximization, network constraints, memory limitation, etc.  

• Security Testing: In banking APIs, authentication and authorization are particularly crucial. Before allowing APIs to carry out specified functions, testers should make sure multi-factor authentication is carried out.  

• Compliance Testing: Testing the processes for onboarding TPPs before they are allowed to integrate with the FI's APIs. Also, this testing helps you define clear internal standards for producing audit trails and reporting procedures that take into account the activities of the FI and their TPP partners. 

Wondering How Load Testing Works For Banking Apps? 

Read Here: https://www.bugraptors.com/blog/guide-load-testing-for-banking-apps  

Applications Of Banking APIs 

APIs For Core Banking  

• They are utilized for standard banking procedures like account opening and international trade.  

Financial APIs  

By giving information to the relevant parties, they are utilized to facilitate the lending and debt collection process. Illustrations of Lending APIs: 

• Onboarding APIs  

• Loan fulfillment APIs  

• Credit underwriting APIs  

• APIs for loan collection 

Card Issuance APIs  

Businesses may use the APIs to generate and manage natural and virtual cards by making an API call. This reduces entrance barriers and shortens the time it takes for firms to create their cards.  

Acquiring APIs  

Acquiring APIs connects your business' checkout process to payment-reaching networks like VISA, making it simple and secure for your consumers to buy your products.  

Future of API-powered Open banking: Banking-as-a-Service  

Open banking APIs enable financial service providers and firms to enhance their service offerings, enhance and customize their customer engagement models, and generate new revenue channels. By embracing the capabilities of open banking through APIs, financial institutions can see themselves as banking-as-a-service providers. 

Banks ought to search for services that may be implemented using APIs. Financial services companies should use efficient API testing services to assure agile, adaptive, and secure APIs to future-proof their innovation and revolutionize the banking client experience for open banking to be successful.  

Open banking is all about creative disruption of BFSI sector. However, the only way to sustain and succeed the banking transformation is finding the perfect balance between data and digital ~ Kanika Vatsyayan 

Wrapping Up! 

API testing is now a crucial component of open banking as more and more financial organizations strive to improve the facilities and security that customers enjoy. Open banking and its products are increasing, so API testing is essential. Consequently, third-party suppliers might regard API testing as something other than a one-time effort.  

To guarantee that product or service APIs fulfill compliance and performance standards as API flows and integrations continue to grow with the financial revolution, API testing for open banking apps and services calls for continuous testing.  

To verify business apps, at BugRaptors we provide thorough API testing services. We assure you of quality, transparency, and cost-effectiveness, by delivering services that are meant to deliver an improved client experience. Thanks to our considerable expertise in providing cutting-edge QA testing solutions for banking and financial organizations. 

Contact us at info@bugraptors.com to reach out to our experts.