Lost in translation: The importance of an API strategy

Effective communication lies at the heart of every successful organisation. Enterprises excel when information, ideas and issues are easily shared. Businesses thrive when they are able to determine what their customers want. This ability to understand, anticipate and act is dependent on having clear channels of communication.

In a world where smartphones, the Internet of Things (IoT) and wearables have created an ecosystem of connectivity and immediacy, Application Programming Interfaces (APIs) provide the channel whereby systems communicate via a common language.

Without APIs, businesses are hard-pressed to create the on-demand, convenient digital experiences we expect every day as consumers. APIs do the heavy lifting – humming along in the background as consumers, with just a few taps or clicks, order food, book a service or hotel stay, hail a rideshare or initiate online payments. APIs power a future without friction by helping businesses create communication experiences that enhance brand loyalty.

In its most basic form, APIs enable diverse platforms, applications (apps), processes and systems to connect and share data with each other. It essentially acts as a bridge between digital services in giving one app access to another to share information or capabilities, which allows for better efficiencies within a programme and offers direct gateways to essential data.

From a strategic standpoint, a constructive API strategy will save organisations time, effort and money, while creating stronger customer engagement ties and new revenue streams.

APIs transform business models by extracting value from existing assets while unlocking new opportunities. By tapping on the combined resources of legacy infrastructure and analysis of abundant data generated by interconnected systems, it delves into customer preferences and attention patterns. Such harnessing of agile, accessible APIs enables brands to move the needle with current customers while providing the flexibility to handle rapidly changing customer expectations.

The ability to adapt data into insights paves the way towards personalising and offering meaningful products and services to customers while simplifying their purchasing process.

In the financial services industry, some banks have integrated data-gathering applications from different sources to safely collect, identify, and transmit the data required for mortgage application. Culling required information from existing systems using APIs improves the customer experience as customers are not required to provide repetitive information. Banks also cut down on approval-processing time – uniting new technology with a traditional product offering.

For example, Capital One Financial Corporation (a bank holding company specialising in credit cards, auto loans, banking, and savings accounts based in Virginia, USA) deployed its next generation chatbots by integrating APIs with Amazon’s voice-controlled device, Echo. Customers can now seek prompt answers to their banking needs via this unique conversational interface without a human agent.

APIs also strengthen customer relationships through instantaneous communication in appeasing security concerns. Many credit card lenders have fraud detection services which alert and automatically send out messages to a customer’s mobile device whenever fraudulent activities are suspected. Customers can then respond by confirming an actual transaction or by denying an unauthorised payment.

Introducing an API culture into an organisation encourages innovation by putting data to good use. In the past, development would have been limited by a set of existing system parameters. These days, creative teams can fully focus on designing products knowing that new products will be linked to relevant sections within the organisation’s ecosystem via APIs. Product developers are afforded an overview of customer footprints through data aggregation which reflect customer preferences much more clearly. Using this information, they can devise detailed, specific solutions and selling strategies personalised to cater to individual customers.

Another benefit is the accelerated ideas-to-market time frame in developing new products which enable enterprises to reap a return on their investment in a shorter period. Without overhauling their entire infrastructure, organisations tap on APIs’ connective ability to integrate platforms and apps to launch new business models. After evaluating its integration architecture, the Canadian Imperial Bank of Commerce¹ decided that a cloud-native, open-source framework using APIs would provide it with the flexibility to offer improved products and services – such as global payments – swiftly. It also managed to speed up procedures in testing new technology for its data services, cutting down a process which would previously had taken several months into a single week.

Speed, simplicity and security will continue to drive innovation in modern-day financial services with APIs pulling everything together seamlessly behind the scene. While an API in itself does not create business value for the company, it works to enhance core business functions in smoothing information flows and removing obstacles in communication and interactions with customers and within the organisation. The challenge for businesses will be to mobilise their API strategy to reap the best value for their customers and for themselves.

Let us help with your API strategy.

¹ API imperative: From IT concern to business mandate, Deloitte Tech Trends 2018