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Open Finance, Key Concepts

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Discover all the benefits of APIs: what they are for and how to manage them

APIs are an essential element of open banking and open finance. Without them, PDS2 would have remained just another standard, valid only in theory but without tangible consequences such as those we are seeing today in the world of finance and beyond. However, APIs do not belong to the world of banking but to the world of computing, and before understanding how they work, let’s start by setting the context with a couple of useful elements to know.

APIs what they are for

This may seem obvious to some, but if it is, you can skip a couple of lines and move on. We need to enter into the world of programming, which should be understood as a real language with its own specific syntax and various styles of writing code that developers can choose according to their preferences and skills.  One often comes across libraries, when talking about programming, that are nothing more than sets of specific tools to perform a given task. They correspond to “calls” to parts of a programme, parts the developer himself uses to carry out his work more smoothly, conveniently and quickly. Now we come to the API. They stand for application programming interfaces and are applications that allow the use of the services made available and that a developer can combine, compose and decompose as he wishes. The dialogue between two applications is greatly simplified by the presence of APIs and there will be no more unnecessarily replicated parts of code.

Definition of API gateways

When working with application programming interfaces, one also has to deal with the API Gateway, a connecting element between a good omnichannel user experience and the world of IT, microservices and services in general. It is precisely by using an API Gateway that you can better organise your programming, manage an API interface and create the associated microservices.

SDK, what is it for?

Another term you may come across when working with APIs is SDK, which stands for Software Development Kit. As the name suggests, it is a set of tools for building programmes and applications as easily and quickly as possible, for operating platforms or hardware. SDKs also make life easier for developers, who can find ready-to-use libraries and modules within them without having to intervene on the code. There are many types of SDK, but they all have a compiler, application programming interfaces that allow interaction with or between modules or software developed for another platform, documentation on the programming language used and information on the licences to be used for the programmes created with a certain SDK.

Why do we talk about API ECONOMY?

Today, there are tens of thousands of public application programming interfaces that are used by software and services in the public eye, in social media as well as in e-commerce sites, to give just one example. This figure helps to understand why the term API Economy was coined: to give an idea of how these elements are now fundamental and have in recent years upset the logic of the market, the Economy, precisely. The wave of digital transformation that we have witnessed and that we will see continue, has definitely been driven by the presence and use of APIs, which mean integration of new services, faster and more agile development, greater responsiveness to market demands.

Thanks to the needs of mobility and the cloud, the use of APIs can only become more intense, and there is also an open mentality in which more and more companies are sharing their information resources via APIs with other developers, with the idea that new business opportunities or user loyalty can be created from their assets.

APIs: how to manage them

As the use of APIs grows, so do the problems of API management and governance. They are needed to develop new applications at the pace now required by the market, but what if there was were a way to facilitate their use And indeed there is, there are API management platforms that monitor and optimise the use of application programming interfaces while also taking care of the security side through access control and security policies, for example.

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