What are the effects of the so-called API Economy on the financial industry

What is API Economy?

According to the prediction of software experts, as companies realize the broad benefits of APIs, they will progressively dismember all of their current monolithic systems, dividing them into many interconnected and highly specialized microservices.

The API economy is creating new business models and opportunities

The API economy makes data and services more accessible and flexible, both within and outside of organizations. In this way, business ecosystems are growing organically, being built with new, informal and spontaneous alliances, in a way that may not have been possible before.

APIs in the innovation of the financial industry

Most of the companies in the banking industry have internally developed APIs to monitor and manage checking accounts, credit cards and in general all their financial products. In addition to this, banks widely use third-party APIs to offer services and features to their clients, but integrating and extracting information from their own data repositories.

What are the benefits of using APIs?

  1. Continuous innovation. Public APIs are made available to third parties, which opens up a dynamic exchange space for constant improvements, as well as the visualization of new and even unexpected uses.
  2. Improved customer experience. APIs facilitate access to services and the exchange of data between platforms that add value to the end customer by improving their experience.
  3. Final products are delivered faster. APIs allow developers to choose from a set of industry-approved open tools rather than creating them from scratch.
  4. New forms of income. A faster product launch allows companies to experiment and generate revenue in new ways.
  5. Technification of non-technical industry. It is possible for companies, even if they are not software developers, to use APIs to improve their business in a way they could never afford if they had to write their own code.
  6. Democratized collaboration. APIs enable collaboration between large, medium and small businesses, and even independent individual developers with industry giants.

The challenges posed by the API economy

Before the use of APIs was so widespread, traditional security practices were concerned with protecting a network with a limited perimeter. Particularly for companies using cloud-based infrastructure, this traditional perimeter no longer exists. New architectures allow local and cloud infrastructure to merge seamlessly, posing new security challenges.

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Automation Insider @ Danaconnect

Automation Insider @ Danaconnect

Cutting-edge cross-channel automation platform designed for the financial industry to ensure security, governance, compliance, and auditing.