An open API is a publicly available interface which is developed to be easily accessible by the wider population of Web and mobile developers. An open API can be used both by developers inside the organization that published the API as well as by developers outside the organization who wish to register for access to the interface. Three main characteristics of open APIs are – freely available to use by all developers, they are backed by open data and are based on an open standard.
Digital market players utilize API technologies to meet their respective business objectives and subsequently creating customer value. It has been witnessed that using APIs in opening up systems, to the outside world, facilitates driving traffic to one’s assets, creates end customer value in the ecosystem and shares the load and benefits among the parties involved when unlocking new markets. Generally, open APIs are made available on the Internet and are shared freely. A software development company might publish a series of APIs to encourage third-party developers in different vertical industries to be innovative and figure out new ways to use the company’s software product.
Open APIs are used by enterprises to leverage the ever-evolving community of freelancing developers, capable of creating innovative applications that can add value to their core businesses. Open APIs are preferred in the business sphere due to their capability to increase the production of new ideas without the direct investments into the development efforts. Often, the enterprises tailor their APIs targeting specific developer audiences that they consider to be the most effective in creating valuable new applications. However, an API can significantly degrade functionality of an application if it is overloaded with features.
Major factors which are playing key role in the increasing popularity of open APIs are – their features enabling third parties to build applications ‘on top’ of the platform, reduction in costs & speeding up time-to-market, adoption of social sharing practices for marketing purposes and syndicate products and services across different platforms. Additionally, today APIs are becoming increasingly important as they determine how developers can create new apps that tap into big Web services – social networks such as Facebook or Pinterest, or utilities such as Google Maps or Dropbox. These APIs provide advantages of time saving and offering user convenience in many cases.
However, the global market for open API faces challenges such as management and security issues associated with publishing APIs and publishing open APIs makes it difficult for organizations to control the experience end users have with their information assets. Global Open API market can be segmented on the basis application and regions. On the basis of application, the market can be classified as cloud computing (IaaS, PaaS, SaaS), transportation, financial services, e-Commerce, social networking, media & entertainment, advertising, government and others.
In recent years the market has witnessed a number of industry initiative with an aim to create standards for APIs growth. There is some evidence that APIs are likely to become a permanent fixture across several industry verticals. Some of the key API standardization initiatives are – Open Banking Working Group (OBWG) UK, CAPS, Open Bank Project, Open API initiative, IXARIS Open Payment Ecosystem, Open Financial Exchange (OFX), Financial Transaction Services (FinTS), Banking Industry Architecture Network (BIAN) and W3C Web Payments Interest Group.
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