The Rise of the API Economy

In today’s fast-paced digital landscape, the big no longer eats the small; the fast eats the slow. Unfortunately, achieving that speed has been a struggle for many, as IT has a relatively fixed set of resources and a constrained capacity to deliver on new projects, so they can’t deliver digital innovation as fast as the business is calling for it.

That is why Application Programming Interfaces (APIs) are emerging as a sort of panacea. Previously only accessible by software engineers and relegated to low-end IT functions, APIs have been rising to the fore as enablers of high-speed data exchange between the critical software applications driving today’s connected digital economies. Any enterprise can now open up its data to third parties such as startups, individual app developers or partners to exchange sanctioned datasets and code features to expand business capabilities collaboratively.

“IT must redefine itself as a self-service platform to enable other departments to pursue their transformational projects. Create an application network that enables self-service IT, and other departments within the business can create new digital experiences, without needing the IT to drive everything. Forming such a flexible application network is possible through API-led connectivity,” Ross Mason, Founder of application connectivity specialist MuleSoft said.

Embracing Openness

Leveraging on APIs to offer self-service IT capabilities may look like a technological feat, but CDOs need to see it as an architectural ideology. In an ideal scenario, an API-led approach assumes that every software system can be addressed by multiple, different and trusted users for sanctioned purposes, through a self-service, one-to-many reusable interfaces.1

Implementing an API strategy forces the organization to restructure internal systems to support innovative projects in a uniform manner that reduces maintenance costs while increasing speed. It leads to new ways to reach out to more customers, strategic partnerships and ultimately, revenue growth. The key is to break down internal silos and allow partners, third parties and even customers to interact and exchange functionalities.

The key takeaway is that software development, in general, is moving towards a composable way of breaking up all applications though microservices and APIs, and realizing more types of software interactions than ever before. In Singapore, the Inland Revenue Authority of Singapore, the Monetary Authority of Singapore (MAS) and GovTech public data repository offer various fully-documented APIs. Many public agencies are also following suit in line with the nation’s drive to embrace the API-driven economy.

In his opening remarks at a FinTech Conference in Singapore in 2016, Ravi Menon, Managing Director at MAS, said APIs are likely to be one of the most important building blocks for innovation in the future economy. "Publishing these APIs allows financial institutions to collaborate with external users to seamlessly merge multiple data sets from different sources into an integrated rich data set, and deliver more functional and customized solutions faster and cheaper,” he said.  The central bank has since then actively pushed financial institutions to embrace APIs as the way to a data-connected ecosystem.

Reusable Resources

Packaging core digital assets and capabilities into reusable products that can be discovered and built upon by others in the business is a bit like playing Lego. The reusability and repeatability are a win-win-win proposition in the API economy. “Working in this way enables the business to create new digital services without having to build everything from scratch if another team has already laid the groundwork; vastly improving the speed and transformative potential of digital innovation,” MuleSoft’s Mason said.  

For example, Lane Crawford is using API-driven connectivity to power its industry-leading omnichannel customer experience, including the launch of its new mobile app. It has been able to bring luxury shopping to their customers’ and consumers’ fingertips, and it can reuse APIs across channels to enable a consistent experience and deliver new products to market faster. By creating a platform where applications, data, and devices can be plugged in and out quickly and securely, Lane Crawford can deliver an industry-leading omnichannel experience.

Taking the lead in such an initiative is AXA Insurance Singapore, which is piloting the first end-to-end transactional insurance API in the region. “The launch of our partner transactional API marks an important milestone in AXA Singapore’s digital transformation journey…that brings seamless integration with our partners and other FinTech players…to enrich the engagements we have with our customers,” Leo Costes, Managing Director, General Insurance, AXA Insurance said at the 2017 kickoff event.

Data exchange as a Currency

Making APIs open turns them into a form of data currency that benefits both the issuers and the users. All parties stand to gain by sharing their IT-as-a-Service (ITaaS) assets and bargaining for their exchange while increasing higher productivity and savings.

As with all currencies and foreign exchanges, security is crucial. With more organizations and developers embracing the transformative power of APIs, the latter are quickly becoming new attack vectors for those looking to achieve widespread damage. Developers need to practice good design principles for APIs so that they can build in security at the point of design, including policies and edge protection.

APIs are secure because they are standardized, well-defined entry points. “APIs allow IT to control who has access to particular systems, what information they have access to and what authentication is required to get in, among a number of other options. With these doors built into an organization’s integration fabric, an application network is structurally secure,” Mason said.

1Willmott, S. and Balas, G. (2015). Winning in the API Economy. [ebook] 3scale, p.21. Available at: http://www.3scale.net [Accessed 10 Sep. 2018].