Taking Care of Business, with API Banking by IDFC FIRST Bank

Startups are hard, hard work.

You're probably stepping out of your comfort zone for the first time and in addition to taking a chance on your idea yourself, you're also taking on the responsibility of other people in your employ. It is stressful, and rightly so. A lot of startups fail in the early years, and while most of these failures are related to a lack of innovation, or the right business model, there are still some that succumb to unforeseen setbacks.

Even with the right idea, and a strong business case, what challenges most startups in the early stages is that you have a small team, and great ambitions. And this core team doesn't necessarily have someone representing each area of the business, which can become a challenge, particularly where technology is concerned.

From an IT and infrastructure standpoint, startups need to create secure apps and websites that work across all mobile devices, navigate data security for their website and app users, and deliver exceptional customer experiences - ease of use, ease of access, ease of support and ease of transaction. You also need to pivot to meet changing customer expectations, and need to ensure that these innovations and updates don't break what customers like, don't create outages, and minimize bugs.

Also, all of it needs to scale to the level of growth you anticipate (and accommodate some more). It's a lot of admin and IT work, especially at the start.

Technology has leapt ahead

For instance, gone are the days when you needed someone from your accounts team to 'handle' payroll. Today, all you do is approve your payroll file in your ERP, and your people are paid. There was a time when after your approval, an accounts person sent a payroll file to your bank. The bank then went through their checks and balances (which could require some action from your accounts team), and three days later, your people received their salaries.

This wasn't in the 90s. This was a mere 10 years ago. Similarly, let's look at accounts receivables reconciliation. Till just a few years ago, your accountant needed to pore over your accounts and reconcile them with the payment advice received from your clients. Now, with the combination of Virtual Accounts, alerts and collection APIs, payments received in your bank account are almost instantly recorded in your ERP, against the correct payee. Moreover, it shows up in your accounting and finance dashboards, giving you a clearer, more up to date picture of what your finances look like.

These are just two ways how even a small team can, with automation, create systems that bake in quicker response times, and greater reliability, than even large teams of people couldn't guarantee a few years ago. The best part: all these solutions can scale up as rapidly as your startup. This is the promise of API Banking.

API Banking Solutions: Creating multipliers 

To begin with, let's understand what APIs are. APIs or Application Protocol Interfaces can be seen as connectors that allow 3rd party systems to work with your own, creating a common set of tools and services. In banking, this means a bank can offer 3rd party access to its custom services through dedicated APIs.

IDFC FIRST Bank now offers API banking services spread across categories such as Payment & Collection, Bene Validation, UPI collect & UPI Payout, Insta Alert, Payment Gateways, Loans and Cards, Trade Services, etc.

For Fintechs, these APIs create wrappers to connect with partners and customers, broadening their offering set, and making it more customisable at the same time. By using trusted APIs from the banks themselves, Fintechs don't have to reinvent the wheel and build from scratch.

For non-Fintech startups, banking APIs can help automate several backend processes. APIs also enable these startups to concentrate on their core businesses, without having to spend time and effort on bespoke software development. In fact, the allure of APIs lies in their plug and play nature and the ease with which 3rd party integrations are accomplished.

For instance, APIs automations smoothen KYC process, making it easier to onboard your partners and clients. Payment and Collections APIs make easy work of payments out and in, while API simplified operations such as account deposits, linking accounts, aggregating accounts, money transfer, etc., greatly reduce turnaround times for everyone involved.

Moreover, since these APIs integrate seamlessly with the ERP and CRM tools that startups in early and growth stages use, as well as large ERP and CRM systems used by enterprise customers, it means that as your business grows, these APIs will scale with you.

The best part: you don't have to wait to be a big, established business. You get to apply these from the get go.

Finding the right partner 

When you're growing at the pace of a startup, you need all the support you can get. IDFC FIRST Bank not only understands this, but sees it as an opportunity to partner in your growth. The FIRST WINGS Startup Banking program offers a well rounded Banking++ solution that goes beyond core banking needs of startups in early, growth and mature stages.

The Beyond Banking Startup Kit equips founders with a one-stop solution for all their business needs. IDFC FIRST Bank's 100+ beyond banking partnerships cover the whole spectrum of business functions: ERP & Accounting to Field Sales Management to Taxation to HR and Payroll.

These offerings, combined with API banking can enable even those startups that are new to technology, to gear up quickly and compete effectively. After all, India is brimming with startups that are incredibly India specific - from specialty e-commerce platforms to agribusinesses to coffee subscription boxes, our startups cater to diverse clientele and solve for very India specific problems.

These are unique ideas and solutions, with strong business plans, and a market that is ready to snap up their offerings. While technology is leveling the playing field and taking away the artificial barriers of geography and distance, it isn't reaching everyone. Today, creating the right technology stack isn't just important to help you compete effectively, it is a baseline requirement. Customers expect businesses to provide certain experiences, irrespective of where they are based out of, or how new they are.

Every startup may not understand technology well enough to leverage it effectively, but every business needs a bank. For IDFC FIRST Bank, this is the opportunity to contribute in significant ways to the startup ecosystem. By enabling startups from early and growth stages, with a combination of offerings that address not just the core banking needs, but also those of the business and the founders, IDFC FIRST Bank is setting the stage for how startup banking can be a game changer for our startup ecosystem.

Moneycontrol journalists were not involved in the creation of this article.