The PAIn of APIs


PAIn of APIsThe sequence of the components of the API acronym—application, programming, interface—does not reflect the sequence in which they are deployed to build an API asset.

In fact, “interface” is the first structural component that builds the bridge between the systems to exchange the “applications.” These applications are developed by one party, then accessed via the interface and “consumed” by the other party to be finally released after use. Whenever the application is not providing the consuming party with the expected value, further improvement (i.e., programming) of the application is needed.

To implement an API, best practice suggests starting from the “easiest” component—interface—then reaching the “hardest”—programming—passing across application. The resulting sequence in terms of efficiency (i.e., cost minimization) is: interface> application> programming.

In terms of value to business results, best practice is to achieve the highest value first: that is, the “programming” component. In diminishing order, value is then brought by “application,” to finish with “interface.” The sequence of API value is, hence, programming> application> interface, resulting in a new acronym: PAI.

In the current dynamic and competitive market conditions, the sum of all these values must be available as soon as possible. That is, now. If we add “n” for “now” to the end of PAI, we get what might be a more accurate acronym: PAIn.

Monetizing Your PAIn

The apparently superficial consideration of acronym order hides a fundamental reality of APIs: An API is only as valuable as the programming behind it. And programming represents the hardest thing to do (i.e., the pain involved in creating a functional API).

Banks are well aware of this; they are pouring billion-dollar investments into development teams and working to establish strong relationships with programming partners. TD Bank Group, for example, reported earlier this year that it will be hiring more than 2,000 talented tech employees this year alone to further the bank’s growing tech capabilities.

Citi is another financial institution prioritizing tech; one of its main areas of focus in the near term will reportedly be automating processes involved in onboarding and self-service options, as well as boosting client communication.

To add real value to their APIs and monetize these tools, banks should consider taking the following steps:

  • Nurture the business relationship with app programmers.
  • Directly engage with their corporate clients’ teams to establish stronger business relationships and provide dedicated solutions.
  • Compete directly against fintech vendors by creating their own app development platforms to attract API programmers.
  • Engage with the programmer as a separate persona (e.g., with dedicated product team) and actively run a developer community to test new APIs.

APIs are useful tools, so long as the programming that powers them is done effectively. To learn more about what steps banks can take to ensure they’re getting the most value out of their APIs, contact me at [email protected].

Check out related Aite-Novarica Group research:

Commercial Open Banking in Practice, March 2022

Creating Customer Value Through APIs: Research Study Results, January 2022

Open Banking Ecosystem: The Foundation of Treasury on Demand, March 2021