We talk about the API economy a lot on this blog, and rightly so. APIs have been and will continue to be at the heart of the digitalization of the world economy. As global supply chains, networks, and businesses become ever more integrated, APIs have enabled those systems to communicate and transfer data efficiently.
However, it can feel a little abstract at times – and given the sheer scale of the global economy – it’s not surprising we don’t always feel the impact of APIs. Our recent post on a world without APIs gives us an insight into what we might have missed out on over the last two decades if APIs didn’t exist.
In this post, we will be looking at the present and future, sharing some of the challenges APIs can help overcome. The events of 2020 and now 2021 have transformed the global picture in many ways. It has forced companies to embrace cloud-based solutions to facilitate remote working, put renewed pressure on supply chains, and find ways to connect with customers without meeting them face-to-face.
And APIs have risen to meet the challenges posed. Let’s take a look at some of those challenges:
Facilitating the Uber Economy
One of the economic themes that has emerged over the last decade is the “gig economy.” As remote working and freelancing become more commonplace, APIs have served as a vital link in connecting those freelancers with businesses and clients.
Platforms like Upwork have thrived on the back of using APIs connecting businesses and freelancers by processing data in multiple formats from different sources. Without APIs, efficient and smooth operations would be complex to achieve - requiring expensive solutions.
The same logic can be applied to platforms that operate in similar ways, such as Deliveroo, Booking.com, and Uber. Each of these companies and industries relies on vast amounts of data that can come from various sources in many different formats. By having API ecosystems in place, businesses will be able to function and meet customer expectations.
The development of fintech has been so fast that PayPal, just a few years ago seen as the undisputed king of financial technology, is now facing fierce competition, including Stripe, Klarna, and Kraken. The onus on financial freedom has seen payment platforms grow exponentially, followed by the surge of interest in cryptocurrency.
Stripe, for example, is valued at nearly $100bn and catching up fast with PayPal. To handle thousands of payments, a second, Stripe invites its clients to integrate its APIs to serve specific purposes – giving companies complete control over all elements of payment processing.
In short, APIs are driving financial freedom to heights unimagined just a decade ago by having the ability to process a high volume of data in real-time.
Diving into the less glamorous but no less important role of human resources (HR), APIs can help with the challenges posed here. One clear example is employment, where HR teams can scan hundreds of data points to draw up a shortlist of potential candidates.
While some may argue that you cannot replicate the human touch of interviews and references, employment agencies are increasingly turning to technology to scan for specific skillsets. For instance, IT professionals need a particular set of qualifications for specific roles – and APIs can quickly support HR teams to filter out those without the necessary skills.
In doing so, it takes hours out of the hiring process and makes the entire operation more efficient, slick, and targeted. The use of impersonal tech ends up making the interview process more personalized for prospective candidates and better use of their time because the basic requirements have already been met.
Enforcing Corporate Governance
The emerging importance of data has posed a significant challenge for companies and governments alike. Privacy, security, and other issues relating to data have defined the last decade when it comes to the digital economy. The EU’s GDPR transformed the digital landscape – for better or worse – forcing companies to step up their game in data management.
In the past decade, even before the GDPR came into force, there has been an increased focus on governance in the digital economy. Data and APIs are both critical components that require a clear strategic oversight. First, let’s take a look at data governance.
In a previous article, we set out the four pillars of data governance:
- Policies and Processes
- Accountability and Responsibilities
- Handling Metadata
The purpose of these four pillars is to set up a coherent governance structure with clear principles and rules for managing data. It is a common misconception that the aim of data governance is based on ethics. While it is undeniably a component, the broader goal of data governance is to deliver accurate, up to date and usable data.
The second consideration is API governance. In a recent blog post, we also set out its four objectives:
- Standardized and regulatory compliant
As you’ll see, the objectives are very similar to data governance. The overriding goal is to set a foundation for a clear and coherent API strategy that supports businesses and facilitates growth.
Companies that invest the time and resources into combining the governance of APIs and data will be rewarded with a robust API network fueled by optimized data.
Now how does this relate to corporate governance? The reality is that data and APIs largely drive the digital economy, and therefore maintaining control over these areas will significantly contribute to corporate governance. It not only optimizes business performance and standardizes processes, but it also helps companies remain compliant with the jurisdictions in which they operate.
APIs: The Challenge Buster for the Digital Economy
The digital economy is driven by technology, which in turn is driven by data. The role of APIs is to serve as the engine connecting the data with the technology. The beauty of APIs is in their flexibility and compatibility with multiple formats and platforms.
The key is to look at APIs as part of a wider ecosystem of digital tools and data management. When utilized in the right way, APIs can help solve some of the biggest challenges posed by the 21st-century economy.
Whether it is setting up a delivery business, finding a perfect employee, or simply maximizing the use of data - APIs are likely to be a key part of the solution.