Essential lending APIs for every lender

Technology and changing consumer needs are transforming lending. People no longer borrow just for big purchases; they’re now looking for quick credit for daily expenses. Consumers can access loans from their smartphones instead of visiting traditional banks. 

To keep up with the demand for fast, personalized service, lenders need to speed up their processes and use more data to meet customer expectations. That’s where Application Programming Interface (API) comes in. 

While some may worry about APIs’ complexities, their benefits are undeniable. To begin with, let’s clear up the misconceptions about APIs being the big bad wolf, stealing users’ private data, or spying on individuals. In reality, APIs are transforming the lending ecosystem by providing secure, efficient ways for lenders to access and integrate data for more informed decisions.

What are lending APIs

Lending APIs are specialized APIs within the lending ecosystem explicitly designed for lenders. They are used in part or whole to decide loan approvals, onboard new borrowers, disburse loans, and collect repayments.

Contrary to critics, a lending API can only access customer data with the customer’s full consent. As a digital lender with a pre-built loan app, you primarily need the following APIs: An API to check borrowers’ default history from credit bureaus, an API to access ecosystem or blacklist data, and a payment automation API, such as direct debit.

4 types of lending APIs that every lender needs

With so many options, which APIs should you focus on? We’ve narrowed it down to four essential types that every lender needs in their toolkit.

Identity verification

Problem

In the lending ecosystem, preventing fraud starts with ensuring borrowers are who they claim to be. Imagine the chaos if lenders didn’t verify identities. Fraudsters could slip through, leading to stolen money and bogus loans. To stay in business, lenders must carefully check personal details against official identity markers such as NIN and BVN, ensuring every applicant is genuine and reducing the risk of financial headaches.

Solution with Adjutor: Lendsqr’s API service

Matching customer image against BVN: Our lending API lets you compare a borrower’s photograph and facial features with their BVN record. This real-time verification helps prevent identity fraud by ensuring the person applying for the loan matches the official records.

Getting bank accounts tied to a customer’s BVN: Our lending API retrieves the bank accounts linked to a customer’s BVN, but only with the customer’s explicit consent. This provides an additional layer of verification by linking the borrower’s identity to their financial accounts, ensuring that the information provided is accurate and trustworthy.

Featured read: APIs for lenders to reduce NPL

Credit decisioning

Problem

For lenders, keeping fraud at bay and making precise credit decisions are key to success. Imagine figuring out if someone can repay a loan without knowing their full financial story. It’s like trying to complete a puzzle with missing pieces. To make smart choices, lenders need to see detailed financial data, like credit reports, account statements, and payment histories. Without this reliable info, they risk higher defaults and financial losses, throwing their business off track. Accurate credit assessments aren’t just important; they’re essential for minimizing risks and ensuring smooth sailing for everyone involved.

Solution with Adjutor: Lendsqr’s API service

Karma API: Lenders can tap into one of the largest private blacklist databases, instantly identifying defaulters and high-risk borrowers.

Ecosystem data API: Lenders can cross-reference applicants against a network of 4,500+ lenders, uncovering repayment histories and potentially sketchy behavior.

Risk Assessment Criteria (RAC) API: Lenders can also customize their risk control parameters and automatically score applicants based on their unique business rules using our lending API.

Credit bureau integration: API calls with credit bureaus can be expensive. However, through Lendsqr’s partnerships, lenders can access major credit bureaus (CRC, FirstCentral, CreditRegistry) at reduced costs, helping them make well-informed decisions about loan approvals.

Featured read: How to use Lendsqr APIs to power your loan app

Payment automation

Problem

Managing recurring payments can be a hassle if done manually. Handling repayments this way often leads to delays, mistakes, and extra work. Automating the process is key to making things smoother, especially for loan businesses that need to collect payments regularly. This reduces manual effort and ensures that payments are collected on time, every time.

Solution with Adjutor: Lendsqr’s API service

Authorizing direct debit: If you still rely on the goodness of borrowers’ hearts to get paid, our heart goes out to you and the scary NPL rate ahead. Lendsqr’s lending API facilitates the automation of direct debits for loan repayments. With customer consent, lenders using our API can set up recurring payments that are automatically processed, reducing the need for manual collection efforts and ensuring that loan payments are collected on time.

Featured read: How to use Lendsqr’s API to build rent-now-pay-later

Embedment with third-party platforms

Problem

Integrating lending and payment solutions into other platforms can be challenging. Your customers expect a smooth, hassle-free experience, which can be tough to deliver when combining different services. To keep things running smoothly, it’s essential to utilize advanced APIs to sync data across platforms, automate workflows, and maintain a consistent user experience.

Solution with Adjutor: Lendsqr’s API service

Our lending API service addresses these challenges through its embedded loans and payments functionality, facilitating smooth integration with third-party platforms.

Embedded loans

Lendsqr’s API service supports embedded loans, allowing third-party platforms to offer Buy-Now-Pay-Later (BNPL) services or other loan options directly on their sites. For example, an e-commerce site can embed a loan service at checkout, helping customers finance their purchases without needing to leave the site or engage in a separate loan application process. Platforms can increase their checkout rates by embedding loan options directly into the purchase process. Customers are more likely to complete their transactions when they know they can access financing easily, without additional steps or barriers.

Embedded payments

With embedded payments, customers don’t need to get loans with a Lendsqr lender. If you have established a relationship with one of our lenders, your customers can now quickly pay for purchases using the funds in their account with your partner lender. This will make payments and checkout on your platform super seamless and easy.

NOTE: Embedded payments are only for checkout services.

Power your lending process with APIs

From spotting fraudsters before they can say “loan application” to making smart lending decisions faster than you can snap your fingers, the right APIs have got your back.

But it’s more than just making your lending process easier (though that’s a nice bonus). It’s about creating a lending experience that’ll make your customers want to stick around. Imagine offering loans so smoothly integrated into online shopping that your customers don’t even realize they’re borrowing. That’s the power of these APIs at work.

So, whether you’re new to lending or a seasoned pro, it’s time to make good use of lending APIs. Your future self and your customers will thank you for it. Let us help you get started today — start here!