The Financial API Gold Rush | NXTsoft

In a recent article by Georgian, the author, Olivia Train, explores a compelling idea that the API Gold Rush is made up of "API Economy Enablers" and three categories of API-first businesses.

From the article:

APIs connect applications, software servers, and data–they enable different pieces of software to communicate with each other. For instance, WorkOS offers an API that enables developers to add single sign-on to their product using only a few lines of code, allowing them to sign on enterprise customers who require that functionality. APIs enable developers to bring together services in hours or days that would otherwise take weeks to build.

APIs have been around for decades, and in the present day, API traffic accounts for 83% of all web traffic. APIs have created incredible businesses. Stripe and Twilio are famous examples of API-first businesses that have emerged in the past decade, making the complex worlds of payments and telecommunications accessible through an elegant, intuitive endpoint.

By providing critical building blocks, APIs have unlocked innovation. Developers and product teams are now able to focus on their core competencies. Let's explore these categories of API-first businesses and "API Economy Enablers." 

API-FIRST BUSINESSES

The three categories of API economy companies emerging are horizontal solutions (APIs that can be utilized at any company), vertical solutions (APIs designed to solve vertical challenges), and API enablers (the infrastructure that enables the API economy to thrive, from development to security & monitoring).

What do these companies need to make them successful?

1. They simplify a complex problem that is critical to their users’ business: strong API-first companies “abstract away the messy, the repetitive, and the complicated." For example, building connectors to bank accounts is technically difficult due to the number of banks globally, as well as the fragmented nature of data available from each bank.
2. They enable an industry transformation or a change in developer needs: Stripe, for example, emerged at a time of rapid eCommerce growth. Stripe enabled a new generation of merchants to access payments infrastructure so that they could focus on their core competency, running their stores.
3. They provide strong documentation and support: API documentation is a piece of content that gives users instructions on how to effectively integrate and use an API. Great documentation is crucial to providing an outstanding developer experience, and will help get them to the “aha” moment as quickly as possible. This will also reduce the time it takes to onboard new users and will save a support team’s time downstream. Zapier outlines 8 examples of effective API docs here and explains in detail what makes them great. Plaid has a history of listening intently to their developer community when creating their documentation focuses on maintainability, scalability, discoverability, and comprehensiveness.

As the "API Gold Rush" continues to produce exceptional companies, these enablers be critical in the future success of the ecosystem.

API ECONOMY ENABLERS

The explosion of the API economy has launched a wave of companies who are selling the “picks and shovels" for the API Gold Rush. The emerging categories include API management platforms, which help developers create, publish, monitor, and document their APIs; API marketplaces, which gives API providers the ability to publish APIs so developers can discover them; and API security platforms, which enable enterprises to deploy internal and third-party APIs while managing the associated security risks. These enablers help give developers and users the critical infrastructure to effectively build, manage, and secure their APIs. For example, Kong, a company that allows users to manage, scale, and monitor APIs and microservices, recently raised their Series D round tripling their valuation to $1.4 billion from March 2019.

1. API marketplaces have become active curators of best practices, resources, and workspaces for developers, providing the support and glue for the API economy to flourish.
2. API security - The increase in the number of breaches has set into motion start-ups like Salt Securityand Noname Security. These companies protect the APIs in an enterprise’s environment by using machine learning to identify anomalies in API behavior data. We see these players as playing an important role in the API economy, by fostering trust with developers who deploy API into their applications, and with users who choose to deploy APIs at their organization.
3. Frameworks are also emerging that help address some of the common security pitfalls associated with APIs. Salt Security’s Head of Research, Inon Shkedy, collaborated with OWASP to create an API Security Top 10, which recognizes “the crucial role that APIs play in application architecture today and therefore also in application security.”

APIs also present significant data privacy risks, due to the inconsistency and opaqueness of API usage terms. The author predicts "that a critical success factor for API-first or API-driven companies in the future will be designing appropriate access level management and working closely with API management systems to monitor and track API activity."

As the article explains, it's necessary for API-first companies to build trust through their security strategy. At NXTsoft, we believe that great connectivity should not compromise security, which is why we offer enhanced security protection and monitoring with every API that we deploy.

Wouldn't it be nice to use one vendor with unlimited API connectivity? Learn how our Fintech to financial institution API connectors can help you innovate digitally, at low risk & low cost. Our API Marketplace offers stress-free connectivity as a service for an enhanced customer experience!

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