The API Economy: What, why and how?

25 Oct 2019, MOQdigital

Microsoft, Financial Services

MICROSOFT Azure + FSI Apps Modernisation - Blog 1

As businesses today grapple with the need to provide better client experiences driven by personalised data driven interactions, the need for an API strategy is front and centre.

The dawn of APIs

APIs (Application Programming Interfaces) have existed since the dawn of modern software engineering, they provide supported and trusted approaches to pass data into or get data out of Commercial or Bespoke systems that drive processes.

Business APIs, however, have been enabled by the modern web where consumer behaviour is forcing businesses to Digitally Transform and find for new ways for their services to be consumed. As such many organisations are disrupting their existing business models. This is done by reusing existing assets or creating new assets to deliver services through previously untapped channels.

Regulation too is driving change by forcing organisations to become more open, allowing clients to access to their own data directly or through an approved Third-Party Provider (TPP).

API Disruption in the Financial Services Industry

In the Banking environment API disruption has largely been forced through regulation. In Europe Open Banking is driven by PSD2 which aims to fundamentally shift how clients can manage and move their funds. The PSD2 law essentially requires banks to securely provide access to customer data and related services to Third Party Providers (TPP).

In Australia the Customer Data Right (CDR) Legislation passed in early August 2019, aims to give customers control of their data and allow it to be shared with Third Party Providers. Many of whom will be FinTech’s looking to provide new services. Currently, the CDR requires the big 4 Banks to provide API access to their core product data, allowing Third Parties (by implication customers) to compare data. By early 2020 customer profile data including transactional data is required to be made available (with client consent). Again, this will be driven by the provision of secure APIs.

The CDR is not limited to Banking, it is scheduled to be extended to other areas including Telco and Energy Providers.

Looking to APIs for enhanced revenue opportunities

Beyond regulation, businesses should be looking towards APIs for new or enhanced revenue generating opportunities. This is what powers the API Economy. Essentially the ability to create new products from existing assets distributed or accessed over APIs OR using APIs to create new previously untapped channels for existing products.

For example, in Financial Services: whether insurance, investment or banking, white labelling products (cover, funds or mortgages) through Third Parties is not new, the means and speed to do so however are changing as the use of common standard API patterns has become business as usual.

Data is proliferating in many businesses as they aim to increase data point collection, using the IoT for connected products, complex marketing journeys, mobility and other sources. As businesses begin to implement advanced analytics and potentially AI over the swath of new data and existing data, new assets are created. These assets have the potential to be directly monetised and APIs provide the means to do so.

Whether driven by regulation, a desire to find new channels or the opportunity to monetise newly created assets – an effective API platform and strategy is required. The platform needs to answer the following questions:

  • How do we group and productise our services into business friendly APIs ?
  • How do we protect our backed services with effective security?
  • How do advertise our API’s to interested developers for discovery and usage?
  • How do we separate test endpoints allowing external teams to build their integrations?
  • How do we control access and provide banded usage?
  • How do we measure success by analysing usage?
  • How do we manage API versioning and lifecycle?

The answer to these questions is found within enterprise API management platforms, such as Microsoft Azure API Manager, which can provide the core capabilities to answer all of the above.

We we’ll be covering these off in our next blog – so keep an eye out.

If you’re struggling to answer any of the above questions, or would like to reconsider the strategy behind your platform MOQdigital can help with our free Application Assessment Workshop.