Application programming interfaces are mechanisms that let different technologies and apps — or software — talk to each other behind the scenes, and they’re becoming an increasingly big deal for business growth.
In fact, a study by Kong Inc. found that the global economic value of APIs is expected to double from the $3.97 billion reported in 2023 to $8.56 billion by 2027. Here’s how you can take advantage of this trend and use APIs in your business to introduce new products and business opportunities.
7 Ways APIs Drive Business Growth
- Developers can build on standardized APIs, cutting time and cost.
- APIs facilitate communication between apps regardless of programming language, enhancing potential collaboration.
- Companies can use APIs to integrate external data into their systems and processes, streamlining decision-making.
- APIs enable businesses to scale rapidly.
- APIs connect data and services, improving the customer experience.
- Digital service-based companies can tap into new revenue streams with data gained through APIs.
- APIs enhance companies’ security protocols.
1. Standardized APIs Give Developers Creative Freedom
Like pieces of a puzzle, different apps and databases snap together and share information through APIs. Since standardized APIs are accessible in both paid and unpaid forms, developers don’t have to reinvent the wheel each time — they can just use existing APIs and plug into maps, payment tools, location data and more.
Developers can focus on building unique solutions for specific user needs on top of easy API connections, and companies can let partners safely access data to make custom extensions of their core products. The result?
They can build innovative new apps and services from scratch that would have otherwise been too complex or time-consuming. This also helps make innovations available at affordable prices. From improving transportation systems to environmental sustainability efforts, APIs empower people to make open data accessible and actionable.
2. Interoperability Enhances Innovation Cycles
APIs simplify integration between complex systems regardless of the programming language or platform. This interoperability breaks down data silos, facilitating the information exchange needed to drive efficient collaboration.
In addition, teams can build on top of one another’s work by pooling resources and skills. For instance, developers can use public APIs and collaborate with other API developers to create innovative products that expand their capabilities and save time. Businesses can then focus on their core competencies while partners meet niche external needs.
The ability to use existing API solutions as building blocks allows developers to create products that uniquely meet user demands, resulting in faster and more creative innovation cycles.
3. Data Integration Simplifies Decision-Making
APIs are generating data-driven business growth across industries by providing real-time access to critical data. Essentially, APIs help companies integrate external data sources directly into their systems and processes to help them make well-informed, strategic decisions. With up-to-date, high-quality information, businesses can identify new opportunities, adjust operations based on market feedback and meet rising customer expectations.
For example, travel companies are using APIs to get booking, pricing and availability data to optimize their offerings. Pulling real-time data by using travel APIs on flights, hotels, rental cars and more, online travel agencies can dynamically adjust prices based on supply and demand, which opens new revenue streams and tailors recommendations to traveler preferences. This results in maximum growth, competitive differentiation and increased customer satisfaction.
4. APIs for Digital Services Accelerate Scaling
One of the key ways APIs fuel growth is by enabling companies to rapidly scale their businesses. For instance, when Amazon mandated that all of its internal teams expose their data and services via APIs, it was initially challenging. In the long-run, however, it allowed Amazon to quickly scale up AWS by simply exposing its infrastructure APIs to external customers.
Similarly, Stripe’s laser focus on developer experience and convenience enabled it to quickly scale in the payments space. By obsessively improving its payment APIs to be as easy and intuitive as possible for developers to integrate, Stripe was able to capture significant market share. Its valuation now exceeds $95 billion.
By offering APIs for your digital services that are anchored around unbundling services into reusable building blocks, designing for ease of use and participating in digital ecosystems, companies can scale at an accelerated rate. On the other hand, APIs are a core factor for companies that aren’t in the tech business but require automation, quality data and fast processing to thrive in fast-paced digital markets.
5. Integrated Customer Data Improves CX
By connecting data and services, APIs help create more personalized, streamlined customer experiences. Take a crop sciences company, Bayer, as an example.
Bayer struggled with a tangled web of information technology systems that made it time-consuming to develop new products. But by integrating these systems using APIs, Bayer sped up their five- to six-week product development to only two weeks — 200 percent faster than before.
Additionally, the integrated customer data provides Bayer with a single source of truth about customers. This empowers employees to spend less time on manual processes and more time innovating. Plus, it gives them time to make more well-informed business decisions, ultimately helping them enhance their customer experience and business growth.
6. APIs Extend Your Reach to Different Markets
Launching APIs empowers digital service-based companies to tap into new revenue streams, access additional customers and even build entirely new product lines. Providing useful features or data via APIs helps third parties construct innovative offerings on top of existing platforms.
Booking.com is an excellent example here. While its core business model focuses on travel bookings for consumers, it also offers a robust API program. This allows hotel chains, airlines, travel agents and online travel agencies to obtain necessary booking and pricing data to enhance their offerings. APIs help them serve a different segment of customers and escalate their overall revenue and profit.
Many other service-providing companies, like Mailchimp, use the same model. Along with their email marketing platform, Mailchimp also offers workflow automation APIs that connect its platform to other apps. This allows Mailchimp to market to technical teams and developers that help customize campaigns.
Whether creating new partnerships, reaching new buyers or launching new products, well-planned APIs pave a pathway for increased business opportunities.
7. API-Based Security Builds Digital Trust
In today’s data-driven world, security is non-negotiable. Customers demand it. Regulations require it. Reputations rely on it. Luckily, APIs offer a key pathway to locking down defenses.
By governing access through modern authentication protocols, APIs allow businesses to seamlessly and securely unlock data to customers who pass verification checks. Once through the gate, encrypted data flows prevent interception by cyber villains.
Banks apply to use APIs with proper security testing for offering mobile banking without compromising financial information integrity. With fine-grained controls over data sharing, APIs permit organizations to uphold security promises even as they accelerate digital pace. While connections multiply in our increasingly interconnected age, APIs provide necessary guardrails. Businesses using API-based security not only avoid regulatory fines but also build digital trust.
Forward-Thinking Organizations, Embrace APIs
APIs connect systems and enable data accessibility, creating opportunities for innovation, collaboration and growth. With secure and scalable foundations, companies can reach new audiences and rapidly build on successes. Just look at the transformations achieved by businesses like Amazon, Stripe and Booking.com after embracing API potential.
Today’s challenges call for innovation, speed, automation and data security, and APIs provide the building blocks to construct them. Any forward-thinking organization would benefit from assessing how these interfaces can drive smarter decisions, better experiences and bigger impacts.
