Build or Buy? Neither. API!

This article was first published on LinkedIn. Subscribe to Ahmed Dekmak's 'Building The Payments Web' newsletter to read his articles as soon as they are published.

An Application Programming Interface, or API, allows applications to communicate with one another. It is the Swiss-army knife of software tools and shouldn’t be overlooked. For Caxton, our APIs comprise the building blocks for any payments-related solution that your company has, needs, or wants; the use cases are endless! For instance, some of our clients use the API to “skip the middleman” by using our services, without actually having to use our service (i.e. The website). They’re able to achieve this by incorporating our API into their platform. Other clients have been able to spin up new businesses, or fuel innovation on existing platforms, through the API.

Why should we create an API?

Before the advent of neo-banking and embedded finance, we lived in a world where information was inaccessible outside of a given company’s walled garden. You were forced to use their services, abide by their rules, and drink their cool aid (and service outage). Pulling data from these systems typically involved the vendor’s “IT guy” and an FTP Server (or Dropbox (scream emoji)), and I won’t get started on trying to integrate two systems, but you can imagine it be a painful exercise involving a few terabytes of XML files and a consultant, or ten.
 Fast-forward a decade or so, and the banks have opened access through open-banking APIs, the neo-banks are now synonymous with lean APIs, plus other forms of modern platform architecture*, and embedded finance will (hopefully) one day enable my fridge to pre-emptively order a new bottle of milk.
 APIs can be moulded to power, or create, just about anything depending on the use case. They are development framework agnostic, consumable by any approved participants and don’t require knowledge or, or access to, proprietary file formats. An API author can selectively expose information, or actions, from/into their API to the outside world. This level of openness has opened a new level of interoperability that has levelled the playing field in several sectors, especially FinTech.
 This has allowed start-ups to thrive without having to reinvent the full wheel that the incumbent banks have made their own over the last hundred years, as they’re able to use APIs to integrate with other FinTech providers to boost, enhance or support their USP. Build or Buy? Neither. Integrate with our API! shameless plug: catch my next article for more info!

How could an API help companies?

APIs are unique in that they can be used to both create opportunities and unlock efficiencies within a business.
 Imagine a company has a finance CRM, people submit their expenses into it as they occur. At the end of the month, instead of having a member of the finance team carry out the calculation & remittances, they can just build a button that integrates directly with the back-end of their expenses platform. Upon submission, the button will trigger API endpoint(s) to calculate the amounts and initiate a transfer through our platform to the relevant employee that submitted the expenses.
 I would classify this as an operational efficiency, as it alleviates pressure on the individual in question (finance colleague) through automation.

Overall, API is a fantastic way to create solutions and build businesses. Allowing software and applications to talk to one another seamlessly and in a seriously fast manner means that we can see results instantly. If that doesn’t excite you, I don’t know what will!