What is an API, types of APIs and how they work

What is an API, types of APIs and how they work
What is an API, types of APIs and how they work


APIs can help companies boost performance, drive innovation and competitiveness, in particular, for small and medium-sized enterprises (SMEs) that aim to optimize their processes, offer enhanced services to their customers and take advantage of the opportunities of digital markets. Find out what an API is and about its benefits.

What is an API? (Application Programming Interface)

An API is made up of a set of rules, protocols and specifications that allow two or more applications to communicate with each other, sharing data and information. API stands for Application Programming Interface.

This API defines the way or rules in which data in one application can be accessed from another application. The user browsing the system will do so seamlessly between the first application, the API and the second application, viewing all three as a single environment.

Example of an API

The simplest example of an API is the web page that communicates with a database to show the user certain information, such as a restaurant’s API, used to book tables.

How does an API work?

A simple way to describe an API would be that it is a bridge between two environments. When a customer wishes to buy a car, the Auto Loan API will appear throughout the purchasing process as a gateway, helping the customer follow the correct path. The two environments are the provider’s payment platform and the banking entity’s loan service. What is most important is that the customer does not perceive the change in environment during the purchasing process.

What banking APIs can do for your business?

Banking APIs are effective and cost-effective solutions for SMEs and large corporations, since they can help them face their internal challenges and take advantage of their huge customization potential and large number of features. Below are the different types of APIs:

These tools are starting to become essential elements to optimize processes and resources. They can all be used to innovate and create new solutions or experiences for customers.

Benefits of APIs for companies

Some of the direct benefits of APIs for companies are as follows:

  1. Wider range of products and services and new business models.
  2. Process efficiency.
  3. Improved user experience.

Wider range of products and services and new business models

APIs can be used to access new features and resources to boost your business. For example, a dealership can offer new online services with Autoloan Calculator, which simulates the taking out of a loan to buy a vehicle.

Process efficiency

An API can automate and reduce the associated operational costs. For example, thanks to Business Payments, a company can automate its payments to suppliers or customers from its own management system (ERP).

Improved user experience

APIs work with a contextual approach, allowing different actions to be executed, always within the purchasing environment. Therefore, users can purchase goods, check bank information or request a loan easily and quickly, without the need to open their online banking apps.

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