Who primarily utilizes Secretary of State (SOS) APIs in the financial sector?

Secretary of State (SOS) APIs have emerged as a critical technological backbone for a wide array of financial institutions, fundamentally transforming how they conduct due diligence, assess risk, and ensure compliance. Primarily, these powerful tools are leveraged by key players who stand to gain immensely from automated, real-time access to official business registration data.

Here are the primary financial sector entities that harness the power of SOS APIs:

1. Alternative Business Lenders and Institutional Lending Executives

SOS APIs are nothing short of a game-changer, enabling them to operate with unprecedented speed and accuracy in a competitive market. The traditional bottlenecks of manual verification are swiftly eliminated, paving the way for enhanced operational efficiency and a superior customer experience.

• Accelerated Underwriting Decisions: By providing real-time access to crucial business registration data, SOS APIs allow lenders to make faster, more informed decisions on loan applications. This rapid access to data, including operational status and filing history, streamlines the entire underwriting process, directly impacting a lender's ability to fund more deals faster. For example, 1West, a leading small business financing marketplace, integrated Cobalt Intelligence's SOS API into their Automated Business Lending Engine (ABLE) to process 20,000-22,000 monthly leads, drastically reducing loan processing time.
• Robust Fraud Prevention: Integrating SOS API data directly into risk assessment models significantly curtails the risk of approving fraudulent credit applications. Lenders can instantly verify key data points provided by applicants against official state records, flagging discrepancies such as inactive businesses or mismatched officer names. This means enhanced accuracy and a stronger defense against bad actors, as exemplified by Bectran, which utilizes real-time SOS data at the moment of application submission to achieve tighter fraud security measures and faster credit approvals.
• Enhanced Customer Experience and Conversion: The automation afforded by SOS APIs translates directly into a smoother, faster onboarding process for borrowers, reducing friction and improving satisfaction. When 1West implemented Cobalt's API, 25% of their customers self-serviced their way through the marketplace without ever needing to speak to a company representative, showcasing the power of self-service enabled by automated verification. This improved experience not only benefits the customer but also boosts conversion rates by removing delays inherent in manual checks.

2. Traditional Banks

Even established financial giants are recognizing the indispensable value of SOS APIs, particularly as they navigate the shift towards digital banking and strive to maintain competitiveness with agile fintechs.

• Streamlined Commercial Account Onboarding: Before commercial bank accounts can be opened, businesses often require registration with the Secretary of State. SOS APIs allow banks to quickly pull the necessary registration information and documentation, reducing the friction in onboarding and accelerating the time to revenue for new business clients. This efficiency supports a robust Customer Identification Program (CIP) within banking operations.
• Efficient Due Diligence for Corporate Lending: Banks providing corporate loans need stringent verification to ensure they are dealing with legitimate businesses and to accurately assess risk. Accessing SOS records via an API helps lenders swiftly confirm proper registration and uncover other critical information that may indicate risk, such as operational status or filing history, thereby informing lending terms.
• Maintaining Regulatory Compliance at Scale: For traditional banks, the sheer volume of business relationships necessitates an automated approach to Know Your Business (KYB) and Anti-Money Laundering (AML) compliance. SOS APIs provide direct, auditable access to primary source data, which is essential for meeting rigorous regulatory requirements efficiently and at scale, minimizing human error and ensuring data integrity for audit trails.

3. Fintechs (Challenger Banks, Neobanks)

Fintechs, often lauded for their agility and low-friction customer experiences, rely heavily on SOS APIs to maintain their competitive edge while upholding critical security and regulatory standards.

• Agile Business Onboarding: The core appeal of fintechs lies in their speed and ease of use. SOS APIs enable neobanks and challenger banks to onboard business clients significantly faster than traditional methods, helping them preserve their operational agility without compromising security or compliance objectives.
• Enhanced Risk Assessment in Real-time: Fintechs are often at the forefront of leveraging advanced data analytics. By integrating SOS API data, they gain real-time insights into business legitimacy, operational status, and potential red flags, allowing for dynamic risk profiling crucial for innovative lending products. This is complemented by Cobalt Intelligence's ability to cross-reference TIN/EIN numbers, UCC liens, and sanctions lists, offering a multilayered approach to risk.
• Seamless Integration with AI-Powered Workflows: Many fintechs integrate AI and automation into their lending lifecycles. SOS APIs, particularly those designed for easy integration like Cobalt Intelligence's RESTful API, act as a vital data conduit, enabling AI models to leverage real-time, verified business information for speed, accuracy, and personalization in the competitive alternative lending market.

4. Payment Service Providers (PSPs) & Marketplace Administrators

In the broader financial ecosystem, entities facilitating transactions or hosting business-to-business interactions also heavily depend on SOS APIs to ensure the integrity and legitimacy of their networks.

• Fraud Mitigation for Transactional Flows: PSPs must prevent illegitimate businesses from using their platforms to defraud customers. SOS APIs add a crucial layer of verification, allowing PSPs to quickly confirm the official registration and operational status of merchants, enhancing trust across all parties in a transaction.
• Vendor and Seller Onboarding Verification: Marketplace administrators, like those operating e-commerce platforms, need to ensure that businesses seeking to sell on their platforms are legitimate and legally operating. SOS APIs provide swift access to registration documentation and other key business information, helping administrators assess the risk of fraud associated with new vendors.
• Automated Compliance for High-Volume Operations: Both PSPs and marketplace administrators often handle a high volume of new business relationships. Automating business verification via SOS APIs minimizes the risk of human error and frees up compliance agents to focus on more complex cases, ensuring scalable adherence to KYB regulations without escalating operational costs.

In conclusion, Secretary of State APIs are an indispensable component of the modern financial infrastructure. They empower alternative business lenders, institutional lending executives, traditional banks, fintechs, payment service providers, and marketplace administrators alike to make faster, more confident, and more compliant decisions. By providing real-time, primary source data directly from state records, these APIs don't just streamline operations; they build a foundation of trust and efficiency that is critical for success in today's demanding financial environment.