Can you imagine a modern city without electricity? Sounds like a scene from an apocalyptic-themed movie! So, let’s try to imagine the realities of such an existence. First that pops up in our mind is the lack of internet, TV, and radio – which prevents people from receiving and exchanging information with the “outside world”. They are effectively cut off from what is going on beyond their immediate area, which needless to say negatively affects their outlook. You could say, Wait, but there are still books. And before the internet arose, people could glean all necessary knowledge from them, right? Okay, books are an alternative. But reading by candlelight outside daylight hours is inefficient and effectively decreases the time spend reading & studying. Not to mention, the instantaneous flow of information – and the great wealth of information we have available to us – through the internet, which we now take for granted, would immediately cease. The average IQ would slowly drop. Societies would follow a downward path and productivity would be negatively affected. So, the ceteris paribus (all other things being equal) city, which does not have access to electricity, would be seriously underperforming relative to others which have it. No need to delve further into other serious issues like security – 50 years’ time would be enough for the city to have considerably lost its pace of development, while in 200 years its demise would become inevitable.
An API paradigm is analogous to electricity, illustrated in the scenario above, in that it can split the payments industry into two groups: the innovators, and the laggards who fall behind and subsequently become extinct. API is more than a critical competitive advantage for Payment companies – it is effectively the means of survival.
Why is it so vital, and how can a business owner benefit from moving their business to the API-first rails? Payment and financial services companies are striving for faster time to market, new business agility, and the ability to deliver secure, intelligent, and connected digital experiences. And APIs are exactly the means to achieve that end.
APIs (Application Programmer Interfaces) – a set of protocols which allow software components, apps, and other services to integrate with each other and share data. Integration is the bedrock of modern FinTech, and APIs are the key means to account for that. Introduction of API has become a major innovation in the financial and payment markets. In the pre-API era, integration between various systems in FinTech took years. In many cases, this situation is still prevalent today, with many excellent projects and initiatives remaining either unrealized or coming to the market too late due to integration absence.
A couple of trends seem to accelerate further API adoption. First, tech giants and FinTechs are making inroads in the payment space, eating up part of the revenue from more established players. At the same time, regulatory forces, like the Revised Payment Services Directive (PSD2), are making banks participate in the innovation race – opening their APIs for 3d party providers. All this pushes more and more companies to adopt an API-first approach, and contributes to the creation of an ecosystem of players. If you want to be the part of the game, you are welcome, and API is your pass.
APIs can grant benefits in multiple aspects. Let’s elaborate on the key benefits granted by APIs:
Modern customers increasingly demand faster, lower-cost, and more agile payment services. First and foremost, APIs enable you to significantly decrease costs and time for product development, which is crucial given rapidly changing customers’ needs. Another crucial advantage of software that is built on API architecture compared to “monoblocks” is fewer bugs and a more stable product.
You can easily roll out new features and scale-up your solution quickly. By “quickly,” we are implying weeks as opposed to months!
New Revenue Streams & Value-Added Services for Clients
Ease of integration enables your partners to develop new services on the top of your API, which brings additional value to your clients. Put another way, you can’t become all for everyone. So, making a partnership is a good strategy to retain and attract new clients, thus creating additional revenue streams.
Summing up, APIs are poised to transform the payment industry. Companies that embrace the API-first approach get increased efficiency, easily win new clients, and secure a strong competitive advantage. Apart from that, it enables you to secure strong relationships with 3rd parties and opens new revenue streams. So, the only question is which camp to choose – the modern city with electricity or the one which uses candles…?