A SDK, or software development kit, is a tool that allows developers to integrate third party features into their own software, apps, or platforms.
Imagine a developer who wants create a mobile commerce app, but doesn't want to spend the time or money building a payment system from scratch. The developer finds a SDK from a third party payment provider that fits his specific needs and integrates it into his app. This allows the app to be released in weeks as opposed to months.
Who uses SDKs?
A skilled software developer with a healthy dose of programing experience uses SDKs for app creation and development.
What are examples of SDKs in finance?
The best place to find SDKs in finance are mobile apps, and more specifically, payment processing. Most card networks, like Amex and Mastercard, have SDKs that allow developers to incorporate card processing into mobile commerce apps. Companies like CardFlight have SDKs for EMV acceptance, and PayPal has an SDK for incorporating its mobile checkout service. Apple provides SDKs that bring Apple Pay into apps as well.
SDKs make appearances outside of payments, too. Banking SDKs allow the creation of secure mobile banking apps, and stock market SDKs allow for real time ticker prices in mobile apps and websites.
What are the benefits of using an SDK?
Building financial service capabilities from scratch can be a daunting task for developers. Creating a service that abides by regulations, has universal payment acceptance, and works consistently can take months to create and cost hundreds of thousands of dollars to build. By utilizing SDKs, small companies and developers can quickly create applications with secure features for a moderate price.
What do SDKs mean for the future of finance?
As finance moves more digital, SDKs will continue to play a major role. Choosing the right SDK is an important decision for a fintech.
On the provider side, it’s become important for a financial service companies to create SDKs in order to maintain market share. For example, SDKs have allowed card companies to become further entrenched into mobile payments since smaller apps use credit and debit card SDKs for payment processing. For smaller tech companies, creating a well-designed SDK can be the way to get a foothold into the financial services market.
It's also part of the blueprint for the idea of platformification. Creating a SDK is an easy way to put multiple companies onto the same platform, while new upstarts can use the security and familiarity of a platform to secure consumer trust at an early stage.