Banks are increasingly adopting open banking and the use of APIs. Essentially, according to Investopedia, open banking involves the use of a banking API to grant “third-party financial service providers open access to…data.” Banks are not the only institutions to see the advantages of API usage and seek to gain them. Businesses from a multitude of industries are now incorporating API utilization into their daily functions. Among these benefits are improved user experience, increased efficiency and better integration.
So what exactly is an API, you may ask? Application programming interface is what API stands for. In simple terms, API serves to facilitate communication from one software system to another. This allows for real-time, faster, more seamless data transfer. Four main API types can be said to be in existence: These are partner APIs, open APIs, composite APIs and internal APIs. Keep reading for a more in-depth explanation of these four types of APIs.
1. Partner API
Partner APIs are both more visible than the other kinds of APIs and unavailable to the general public. Something called a specific entitlement is required before a business is allowed to use a partner API. Only certain parties may use partner APIs, basically just the business partners in a network. They are often utilized in a specific capacity, such as for providing a particular service or product. A partner API is very similar to an open API, only more limited.
2. Open API
Open APIs are also known as public APIs or external APIs. Their access is open to the users and developers of the general public with few or no restrictions. Though they can be completely open, some open APIs might require a key or registration to use. Open APIs are a double-edged blade. Businesses with open APIs can save resources through the labor of developers not employed by the businesses themselves. However, the use of open APIs also opens businesses up to management problems and/or security risks.
3. Composite API
As per their name, composite APIs are a conglomerate of many APIs, both service ones and data ones. By combining API subrequests together, the amount of calls needed is reduced to one rather than numerous interactions occurring between servers. They are sometimes not considered an actual API type in and of themselves, which is why you may notice some places claiming that there are only three types of APIs.
4. Internal API
Internal APIs may also be referred to as private APIs. As you may infer from the name, internal APIs are not available to the external public; they are the opposite of open APIs. Instead, internal APIs are intended for the sole use of a company’s employees. It allows backend data to be accessed by the business’s developers. One benefit of having an internal API over an open API is that it can lower the amount of time needed for development and it carries a smaller possibility of security breaches. However, it does not allow for the utilization of external non-paid developers.
APIs are an important tool in the modern age of technology. They allow for functions that would be impossible without their usage. APIs and their types are considerably more complex than the brief overviews given here, but this brief introduction covered the basics.