The what, why, and how of the API Ecosystem
APIs are the tools that allow businesses to leverage data and technologies to expand product offerings, enhance customer experience, and deliver operational efficiencies as well as complement existing platform capabilities. Where constraints exist in legacy systems, well crafted APIs provide options and possibilities to expand beyond those constraints. The links below will give you more context around the what, why and how of the API ecosystem and why having a strong one is critical to a modern financial institutions’ business.
What is an API?
An API (Application Programming Interface) is a defined interface through which one software application talks to another software application. Essentially it allows the sharing of information. Thanks to APIs, programs and devices can communicate safely, without knowing the internal workings that allow the other to function. Removing this need to share complex information and platform details removes cost, time, and complexity from the process of building new business solutions. APIs make application developers and product planners’ jobs easier, working like ready-made building blocks for creating software.
This process is not dissimilar to what happens at a restaurant when you go out. You are given a menu of choices which you want to consume. This is the API Catalog – a menu of ready-to-consume sets of data that are a representation of something much more complex. In a restaurant analogy, the waiter is the API, taking your request for the “ready-to-consume” menu item back to the kitchen where the chef translates that into a recipe that could be very complex and detailed. The chef is the back-end of the system you want the data from (Temenos Transact or Infinity for example), and while your data is prepared by that system, the API call (the waiter) waits to deliver your ready-to-consume information back to you.
Having something to translate between a usable set of data in a format that is defined and documented is what makes an API so powerful for a developer. Integrations that used to take many months or years can be accomplished in mere hours because the exchange of data is regulated and standardized by the API provider instead of requiring rework for every possible scenario.
Why use APIs?
There are a number of reasons why you should be interested in APIs, here are just a few:
- They can help you innovate and expand your reach through new product propositions, leveraging new platforms or new channels.
- They can help with automation, allowing the technology to do the work rather than people therefore creating operational efficiencies as well as speed to execute.
- Personalization, the application layer of the API can be tailored to the needs of the user therefore creating a more customized experience which is more relevant to the user. Such personalization of experiences and products has been shown to create better engagement with users or customers.
- Integration: an API allows content to be published automatically across all channels therefore facilitating more timely and consistent deployment of content.
In short, a good API ecosystem will help you with more aspects of your business now, and in the future.
The Business of APIs
In the modern, digital era, the reality is that APIs are simply part of doing business. To put it directly, businesses don’t need an API strategy, they need a business strategy that includes APIs as a core part of the overall business. As a provider of a comprehensive API ecosystem, we do have an API strategy, and it is to make sure that our API ecosystem supports our customers and providers in building their business strategy out with APIs built right in.
Already we have seen many banks and financial services firms embrace the digital era. This has increased the need for, and the ability to offer ways for more and more external and internal systems to connect and share data seamlessly. This also means that banks and financial services companies are already beginning to develop and offer their own APIs that can be consumed by external providers. AISPs and other types of aggregators are setting the precedent that my financial data is just like everything else; always on, always connected, and instantly available.
Without a comprehensive business strategy that includes this type of external and internal connectivity, banks and financial services firms will find it harder and harder to stay relevant. That’s why having a paltform that allows not only the exposure of pre-configured APIs, but the development of custom APIs is critically important. Building APIs from scratch, and in house is a huge undertaking that can be almost impossible for institutions that lack the resources to compete for talent in an already hyper-competitive market. Having some of that work done by your platform, up front, means that you shorten the time to innovation and execution and reduce the barriers to entry. The Temenos API Ecosystem provides just that, by offering pre-built and fully customized API capability that you can leverage to reach your own integration targets.
What API do I need?
Well probably a bunch of them. Any suitably comprehensive application is probably going to require not just a number of APIs, but may even require you to customize them to suit your particular needs and environment. The Temenos API ecosystem was built with this exact scenario in mind. We offer two types of APIs via our Interaction framework:
- Enterprise APIs allow a customer to take the basic “out of the box” APIs (the ones documented in the API Catalog), and use our tools to modify them to suit the needs of the bank/use case/solution that is being built. Having a toolbox of APIs that can be completely refined or improved is incredibly powerful in ensuring you get the best API for your environment.
- Experience APIs are fixed APIs that are designed to allow rapid integrations and reliable and standard communications between the Temenos platform and 3rd party providers of solutions, the bank’s own internal systems (such as through an ESB), or other external mechanisms. PSD2 is the most common example of an experience API because the experience of using the API is the same from one implementation to the next.
We’ve built some examples to help you get started and show you some of the ways an ecosystem of APIs can work together.