With technology evolving constantly and new software solutions being created, API driven technology enables your applications to offer more functionality without the headache of building new technology from the ground up. In other words, it enables you to leverage other solutions to enhance the functionality of your own technology.
What Does API Stand For?
API stands for Application Programming Interface.
What Is An API?
To put it simply, an API is a technology permitting two systems to communicate with each other directly, such as your technology communicating with Facebook or another platform. APIs interpret and break down data so it can deliver readable information between systems.
A Simple API Explanation
Okay, maybe that was a bit technical. Let me give you a more familiar view.
Imagine your customer is enjoying a cozy Sunday afternoon at your café. The barista and the kitchen crew are part of the “server system”, which is responsible for creating your customer’s order.
Now before your customer can truly enjoy her afternoon with a cup of coffee, the waiter needs to deliver the information to the barista or kitchen.
Much like the waiter in this example, the API is the one that connects the customer to the system.
The waiter (the API) sends the order to the barista or kitchen (the server system) and tells them exactly what the order is. Then the waiter delivers the order (the reply) back to the customer.
The waiters don’t have to explain to you how your coffee was made, they just simply deliver a cup of coffee to you. This is how APIs work, and in doing so they simplify the information you (as the customer) need to manage.
What the customer needs is to see the end product and not the whole process of how it was made. The API does all the heavy lifting in the background by leveraging the technology of another provider to do so.
Benefits of API Driven Solutions
What makes API Driven Solutions increasingly popular these days? I’ve listed the 5 most important benefits on why you should incorporate APIs into your technology.
1. Provides Automation of Tasks
Remember when you used to do the mundane and lengthy task of gathering data and sectioning them one by one? Or how about keeping tabs on financial transactions? Stressful right? APIs allow you to work productively without having to make you work for hours on end.
2. Provides a Layer of Security
When you’ve integrated API in your business, not only are you creating a simple and easy avenue for your customers to interact with, but you’re also providing a layer of security that protects against threats internally in your system. Having the data stored from a third-party which can only be accessed via an API reduces risk by decentralising the data storage facility.
3. Provides Customer Personalisation
With APIs, companies can personalise their customer experience. This is great for your business with customer experience being of such a high priority. The more the customer feels right at home with your system, the more the “business relationship” sticks. With APIs, you can focus more on your customer’s experience rather than building functionality other systems can offer.
4. Provides Efficiency
APIs provide efficiency such that when your technology solution requests data from an external system, it becomes available to you. Most importantly, you can leverage other systems to process complex tasks using their own internal frameworks. For example, the Xero API can be leveraged to generate and send out invoices to your customers so you don’t need to; but more on this below.
5. Provides Wider Scope
The great thing that APIs provide is opening the doors to new functionality for you. You don’t need to build every piece of functionality you want as systems used to require, meaning you can offer more than you would have with less work.
Top APIs for Financial Services
There are APIs for almost anything. With financial services being one of the most leveraged API types, here are some APIs you could find useful to suit your business needs.
Xero is an application that will help you get your accounting data in check by providing comprehensive reports so you can go about your accounting with ease. Their user-friendly interface is simple to use, and they offer unlimited users for each account.
It has a variety of functions that commit to boosting your business by providing you easy access to your book keeping and accounting needs. You can integrate your system to generate automatic invoices, get real-time financial reporting, and automated bank feeds.
Although Xero caters better to small businesses because of their system’s limitations, they are open to offering adjustments to connection limits – especially when you’re handling multiple organisations.
See Xero here.
If your business has an option for online credit card payments, then Stripe is our recommended application of choice from an ease of integration perspective.
I’ve made a lot of online purchases myself, and those that pushed me into clicking that buy button were those with a credit card option. And the best thing about Stripe? Their rates are super competitive for companies and scale down with volume.
See Stripe here.
Yodlee is a US based software provider that provides data aggregation and data analytics services. Put simply, Yodlee offers a simple and secure way for businesses to collect financial data from banks (or bank feed data). This includes transactional data, loan data, and more. One of the reasons that Yodlee is ahead of the pack is that they have over 1,400 financial partners they are capable of fetching data from.
See Yodlee here.
Why Make Your Solutions API Driven?
The bottom line is that if you want your business to run efficiently without having to deal with hitches, then you definitely should consider being API driven. They enable you to build more functionality into your system in less time, helping your technology to scale.