API economy is an evolved term that has come around from being just a link to an added functionality in an app to a whole paradigm capable of highly connected, functional, and intuitive apps. In this blog, we will have a look at how APIs have transformed the whole app development avenue paving the way for a surge in the thriving API economy. We will also touch on how enterprises can capitalize on this economy. Let’s begin by understanding what an API economy is:
APIs refer to a set bundle of functionalities packed in code and customized for reuse in any other application as needed. According to Gartner, APIs enable connectivity amongst people, places, data, systems, and algorithms, and create user experiences. It also helps share data, information, authentication information, and facilitate transactions, and leverage third-party algorithms, in a bid to create new products or services as well as business models. The API economy has come out to be an opportunity that helps create new services, capabilities, etc. which shall ultimately give rise to new sources of revenue.
There are four main types of APIs:
APIs can help businesses rapidly scale up by accessing third-party services and data. It can help them transform their services into a platform that empowers others to build upon and use it. For instance, a communications company can offer its chat API on a subscription fee to its clients, who can further customize it to integrate into their point-of-sale systems for customer interaction. Similarly, a fintech or a payment gateway company can offer retailers its API as a way to accept payments online. APIs are the building blocks of IoT too because they allow IoT devices to communicate together quickly without a human user present.
Instead of building all the APIs that IoT and mobile devices use from scratch, developers have the provision to pick APIs from various sources, enabling interoperability, customization, and efficiency to match increasing consumer demands. For example, weather details can be sourced on a maps app on a wearable device, from a third-party API or a weather company, and this data can be built upon to offer customers a more authentic and holistic user experience.
A primary benefit of the API economy is, that it encourages people to collaborate with API providers and deliver engaging as well as efficient user experiences. APIs and microservices can be improved and changed faster. This enables organizations to integrate business processes and access previously unavailable business ecosystems via enhanced flexibility, agility as well as data access.
Other benefits include:
As the API Economy continues to mature, more companies will realize that APIs can help them successfully launch new services and transform their business, relationships, and experiences. Leaders need to understand their value and how selecting a trusted API development company can deliver these key building blocks and measurable results for your business.