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What is API, and how to use it in your business?

API is an abbreviation for Application Programming Interface and tells how software elements will interact.

APIs emerged in the early days of computer science as libraries for operating systems, allowing code sharing and modification. And although it was used to send messages between mainframes occasionally, its function was essentially to transmit data between local environments.

The use of these interfaces as we know them today, based on open protocols, is recent and took shape almost three decades later. The fact is that these tools have surpassed local environments and have become quite relevant in remote data integration.

Do you want to know in detail what APIs are and how they can be valuable for your business? Then stay with us until the end of this article!

What is API?

APIs are programming interfaces that connect platforms or programs, making requests and communicating data between them. They outline a set of rules and routines that establish protocols through which these platforms will interact.

The programming interfaces guarantee communication between different types of codes, defining specific behaviors that they will have among themselves. The goal is to facilitate the integration between different solutions to use ready-made features in other applications.

Okay, but why was the API created?

An API originates when a software company aims to serve as a basis for developers (from other companies or independents) to create new solutions from its service.

They can be private – when the main objective is the monetization of the interface – or public – when the goal is to gain brand awareness about the launch of an open-source product, which benefits the programming community.

In this way, APIs are like bridges through which companies can take advantage of third-party services when implementing their own solutions.

When we talk about APIs, there are 2 points of view:

Companies that promote Open Innovation, such as Google, which provides plugins such as Google Maps, for use on any website or platform.

Companies that want, among other things, to reduce the time to launch new solutions on the market, taking advantage of ready-made codes.

In this article, we are talking more conceptually about APIs. To contemplate open source enthusiasts, at the end of the text, there is a contextualization about the value of these programming interfaces for Open Innovation!

Why use APIs?

Investing in APIs means simplifying developers’ work. It allows a solution to be incremented with ready-made code, without the need to program from scratch every function that your program/application needs to perform.

Increasingly, APIs’ use gains strength in the addition of ready-made features to create better experiences in new solutions. For these and other reasons, APIs are everywhere.

The multiplication of online payment systems is evidence of automatic APIs’ overall functionality and surf the wave of the “API-fication” trend in programming. Fintechs are prolific in that (you will see more about that here).

Google Maps is another great example of an API. Through its original code, countless other sites and applications use the map data to embed the component in their own solutions.

This is easily noticeable when you access apps like Airbnb, for example, in which you can view Google maps within the apps themselves to know the establishment’s location that will be staying or apartment to rent.

The same happens with apps like Waze, Uber, among others. Procedures like these are performed through APIs.

And what are the advantages of using APIs, whether they are public or not?

  • Greater control over software and hardware access permissions.
  • New revenue streams, such as monetizing APIs.
  • Agility in the integration between systems and applications
  • Decreased coding time for developers.
  • Improves the experience of digital products.
  • Simplification of internal processes.
  • Reduction of time-to-market for digital solutions.

What are the types of APIs?

The APIs can be of 3 types:

Closed/private API: when the API is used only internally, giving companies greater control over interactions and solutions.

Shared API: when the API is shared with business partners.

Open/public API: when the API is made available to everyone, and any programmer can develop solutions that interact with it, generating opportunities for Open Innovation.

What is the difference between API and web services?

There is a common doubt among programming enthusiasts – the difference between APIs and so-called web services. First, we need to establish the following: every web service is an API, but not every API is a web service.

Confusing right? We’ll explain why!

Webservices are a type of API that uses an integration model prior to what we know today. They do, however, have limitations concerning the most modern interfaces, being considered the predecessors of Application Programming Interfaces.

A positive point of the web services: they are generally combined to execute complex requests, mainly those that use the HTTP (HyperText Transfer Protocol) protocol, the same, famous, responsible for the transfer of data on the internet, on sites with HTML code structure.

And how do the APIs work in practice?

Regarding APIs, we can say that they are more advanced and flexible versions with web services. Still, they differ fundamentally by the possibility of making systems communicate even if they use different implementation languages.

Therefore, if you are using an API, the data client does not need to know which procedure to request on the server. You just enter the command, and the system already knows what result you want with that. It is not magic. It is technology. 

In common, both can operate inside machines or networks. However, the programming indicates that web services work best in contexts where interactions occur from machine to machine. Simultaneously, APIs are more efficient, for example, when communication takes place from software to software.

The future of APIs

Some say that, in the future, all innovation will be open. As it will no longer make sense for companies to assume the risks of innovating on their own (and innovation should be increasingly impacting and scalable) for the promise of keeping the profit just for themselves.

In short, the future seems to be “open source.”

Open Innovation happens when an organization does not depend only on its internal knowledge, sources, and resources to create new products, services, business models, and processes. Instead, the company also uses external sources (partnerships with startups, universities, among others) in the R&D process.

As we said earlier, within this, some concepts from Open Innovation emerge, such as Open Banking – one of the best examples of implementing an open API ecosystem, led by fintechs.

And that is where open APIs come in: the heart of this transformation in the banking sector. The Open Banking solution promises to change the financial system through the creation of a standardized database. Thus, companies would exchange information to develop more adherent solutions, heating up the competition.

The approach gains more and more relevance in the market, reinforces the idea of ​​an open financial ecosystem, and plunges headlong into the trend of API-fication in the sector. The forecast is that open platform banking services, public APIs, and outsourced applications will give the cards in the segment.

What is the practical importance of opening the APIs?

Sharing APIs with partners or opening it to the public generates a series of positive effects and feeds back into the API market, facilitating new solutions from existing ones.

Opening up technology expands brand awareness and encourages programmers and developers to create an application ecosystem based on its API.

And the more people use this API, the greater the chance of generating new business.

Still, in the example of the financial system, in banks, which are massive platforms that generate informational inputs, an infinity of data becomes part of a collective ecosystem (such as banking score systems).

Open APIs enable a more sophisticated analysis of a large volume of data using emerging technologies. This is an excellent opportunity to convert insights into more adherent solutions.

The collective construction of a system (whatever it may be) can create new competitive levels and drive innovation through a change in the process of developing new products and services.

This seems to be the future. And that is the size of the role of open APIs from now on. Want to learn more? Go to our resources page!