Open APIs: what’s it all about… and how do you benefit?

Open APIs: what’s it all about… and how do you benefit?

Have you been wondering what all the talk about open sharing APIs is about, or even just wondering what an API is? We hear you – and we thought it was time for a quick overview of the topic getting quite a bit of airtime lately. Read on for a quick five minute summary of open-sharing APIs and what it means to your business…

What is an API?

API stands for Application Programming Interface. An API is a set of routines, protocols, and tools for building software applications. So in the simplest terms, APIs are the method for computer programs to communicate with each other.

How are APIs used?

APIs are what makes it possible to move information between programs every time you use your laptop or desktop. Just as computer programs and applications all have a user interface which makes it easy for us to use them, APIs make it easier for developers to use certain technology in building apps.

On the web, APIs make it possible for the likes of Google Maps, Uber or Facebook to let other apps “piggyback” on what they offer. This is why you see Uber pop up as a transport option when you’re searching directions on Google Maps, and it’s why you get invitations to play online games with your friends via Facebook Messenger.

Probably the most common example of how open APIs work is when you’re offered to login to a website using your Facebook, Google or another social account. When using the Facebook, Google or other platform’s sign-in API, it connects your existing data on that network to the new site or service.

What’s the benefit of open sharing APIs to you and your business?

Open APIs are published to encourage developers to be innovative and figure out new ways to use software products. In theory, it’s a win-win business arrangement and a win-win for customers. For the customer, we get an improved user experience and it also opens up competition, giving us more choice.

Open sharing APIs allows for developers and businesses to innovate faster and share learnings. In turn, this meets our rising expectations of everything being faster, cheaper, better. For instance, when it comes to your business accessing finance, if the banks were to open APIs, Spotcap would be able to reduce its development costs and more importantly to you, we would be able to increase the speed of processing credit applications – getting you lines of credit even faster.

Is there a risk with sharing data?

For businesses opening their APIs, they are essentially opening their back-end information and processes to the public (mainly other software developers in this case), creating a range of security and management challenges. Publishing open APIs can sometimes mean businesses lose control of the experience customers are having with their information assets. In saying this, open sharing APIs is not new. Google, Facebook and Yahoo have been doing this for a long time, without any significant issues.  

Why are the banks reluctant to open APIs?

Many major banks continue to argue that open data sharing APIs would be costly to implement and may compromise security. Customer data is a valuable commercial asset for the banks however, so holding onto that data is more focussed on the needs of the bank, rather than the customer – it is essentially hindering competition for financial services.

In this age of collaboration and the sharing economy, sharing APIs makes complete sense. If the banks open APIs, it would further stimulate innovation and ultimately improve the customer experience – benefiting all of us.

Ready to access finance to grow your business? Contact us now.