Plugging Into the Power of APIs

Although application program interfaces (APIs) have been around for decades, they’ve only recently hit critical mass and become a ubiquitous part of our online ecosystem. Whenever you use a ride-hailing service on your phone, sign in to an audio streaming app with social media credentials or scroll through the latest stories on a news aggregator, you’re tapping into the power of APIs.

When properly aligned with an organization’s goals and implemented strategically, APIs can help businesses be more nimble, deliver new capabilities faster and serve customers the way they want to be served.

What Are APIs?

At a basic level, APIs are software intermediaries that help different computer systems or platforms talk to one another. They do this by sharing a common language that defines what a product or service does and how it’s used. APIs are useful for developers because they eliminate the need to build a new digital product from scratch. In the case of a ride-hailing app, its map functionality isn’t coded from the ground up. Instead, it uses an API to call another company’s map service and deliver it to you in a familiar format—without you leaving the app.

Benefits of APIs

APIs in Action

Whenever we build a new value-added service at JPMorgan Chase, we plan to build an API around it. In a way, APIs can be thought of as another digital channel, much like a desktop or mobile experience, that we believe must be available for all of our core services. Chase Pay®, for example, leverages an API to give customers the option of using their credit card or rewards points at millions of retailers worldwide that have dropped a snippet of code from our developer portal into their checkout process.

Developer portals store and define the APIs an organization provides, thereby creating bridges for adoption to the developer community and other stakeholders. A well-designed developer portal should provide everything that internal, partner and third-party developers need to get accommodated with the technology and test out ways in which they’d integrate with it.

APIs and Open Banking

Businesses can also use APIs as part of open banking. A growing trend, open banking is the practice of sharing financial information electronically and securely through the use of APIs, allowing faster, more efficient delivery of core banking services, such as payment initiation and account balances.

In addition to reducing operational expenses and increasing security, open banking enhances the customer experience. APIs that can be consumed by front-, middle- and back-office platforms—from accounting and treasury systems to specialized industry software­—help simplify onboarding processes and enable information to be integrated more easily, meeting the customer wherever they are on their digital journey.

Tips for Implementing an API Strategy