API in Digital Transformation – How Data Extraction Software Connects Systems Efficiently

 

Data extraction technology has made significant advancements in the last ten years. Initially rooted in basic optical character recognition (OCR), it has evolved to accurately read, interpret, and analyse a wide range of documents at scale, extracting specific information with precision. While other AI-driven tools have seen rapid growth and adoption, data extraction technology has yet to achieve widespread use.

This article will explore how document data extraction can serve as a disruptive technology, driving digital transformation by seamlessly connecting different platforms and systems. This is particularly relevant in New Zealand, where open banking is being introduced. Read on to learn more about the challenges of open banking and how tools like Xtracta’s bank statement capture APIs can help overcome these hurdles.

 

What is open banking?

Open banking in New Zealand is a regulatory measure aimed at fostering innovation in the banking sector, where competition has traditionally been limited. It requires banks to securely share financial data with third parties, enabling greater access and flexibility. This data exchange is facilitated by APIs (Application Programming Interfaces), which can be used for a variety of purposes.

 

• Payments: Open banking allows consumers to make transactions online without using a debit or credit card.
• Budgeting and financial management: Open banking facilitates the development of financial management tools by allowing transactions across multiple accounts.
• Mortgages and loan applications: Instead of manually compiling documents required for approval, consumers can share information with lenders using APIs, which streamline the process.
• Interpersonal payments: Bill splitting and other person-to-person transactions could benefit from open banking’s exchange of information.

 

Ultimately, open banking gives consumers more options and control over how their information is used. For fintech companies, it creates the opportunity to innovate more easily and quickly.

 

What challenges has open banking faced?

Although open banking is poised to help New Zealand consumers, the journey to implementing it is ongoing and has faced some hurdles.

• Scope of expenses: Setting up the technology required to run an open banking system has been costly, requiring significant investments from banks and government regulatory bodies.
• Sluggish progress: Open banking has also been slow to roll out in New Zealand compared to other countries. Following the initial launch of Payment Initiation and Account Information APIs in 2019, only two banks have adopted them. Slow implementation has also been attributed to insufficient commercial incentives and possibly an uncertain regulatory climate.

 

How data extraction technology can integrate systems efficiently

Open banking envisions a future where fast, secure data sharing becomes the norm, enabling customers to access better deals and benefit from financial management apps. Traditionally, banks have restricted customer data from external parties, but open banking aims to change that by creating a collaborative ecosystem.

 

However, a major challenge lies in the cost and complexity of setting up APIs and system connections. Each bank’s unique infrastructure makes establishing seamless data sharing both time-consuming and resource-intensive.

 

Modern data extraction technology offers a streamlined alternative. When open banking was first proposed, this technology was less advanced. Now, tools like Xtracta can achieve similar outcomes without the need for extensive collaborative frameworks or stakeholder coordination.

 

By reading and parsing documents to identify key data points—regardless of format—Xtracta overcomes the lack of universal templates for invoices or bank statements. Existing documents generated by businesses and organisations can be leveraged directly, eliminating the need for custom infrastructure.

 

For instance, loan applications often require detailed financial documentation, which is time-intensive for both applicants and lenders. Xtracta automates this process by extracting relevant data from bank statements, payslips, and other documents, drastically reducing processing times. This approach minimises the need for new protocols and infrastructure, making it a practical alternative to open banking’s complex requirements.

 

Transforming system integration using Xtracta

Xtracta’s robust data extraction capabilities continue to improve through advanced machine learning pipelines, delivering results comparable to open banking with significantly less investment. As a versatile tool that can understand and recognise a wide range of documents, Xtracta’s potential use cases and benefits are not limited to any specific industry or user.

 

Contact an Xtracta expert today to learn how data extraction software integration can transform your business processes and unlock new efficiencies.