Today's digital economy is shifting toward dependence on microservices — self-contained and reusable software components — working in coordination to compose the applications we use. Communication between microservices happens through the API (or application programming interface).
Using APIs (which are like pieces of software that let applications communicate with each other) is how microservices expose their functionalities and allow access to their services and their data.
Many companies in financial services and beyond are now trying to build rich FinTech API strategies and ecosystems in data sharing, ecommerce, security, cloud, and mobile applications — to name a few. This opens many doors of opportunity for both API consumers and providers, and this opportunity for innovation fuels what is known as the API economy.
In this article, we'll explain what the API economy is, how the API economy affects businesses, and some API economy benefits and challenges. We'll also discuss steps on how to get started in the API economy and how to adopt, and participate in, an API economy successfully.
We'll cover this with a focus on the financial services and financial technology industries and through the lens of open banking and embedded finance — but this information holds true for the API economy in any industry.