API Standardization: Seamless Integration Across Ecosystems

APIs are the unsung heroes of modern software. They work quietly in the background, enabling the apps we use to request and receive information. Without them, your phone’s weather app wouldn’t have access to real-time weather data. Your banking app wouldn’t be able to send money. Digital life would grind to a halt.

To work effectively, APIs need to follow certain rules and standards. Otherwise, security risks and integration failures pile up. Picture a FinTech startup trying to integrate with different banking platforms, only to find that each API follows a different structure. As a result, developers spend more time fixing than innovating.

This is where API standardization comes in. By adhering to API standards, businesses can:

• Ensure seamless API integration
• Improve application security
• Build highly scalable and user-friendly apps
• Spend more time building and less time fixing

In this article, we’ll highlight the importance of API standardization for financial institutions. Read on to explore best practices, benefits and real-world use cases.

 Why businesses must standardize APIs

API standardization might sound abstract, but it brings tangible benefits. After all, APIs aren’t just code — they’re the digital connectors that keep modern IT ecosystems in sync. API integration standards set out agreed-upon rules for data formatting, inter-app communication and information sharing. For example:

• OpenAPI is a framework for building apps that can interact with RESTful APIs
• JSON Schema defines how data should look for consistent data exchange
• AsyncAPI standardizes event-driven APIs for real-time communication

To illustrate the importance of standardized API development, let’s look at the key benefits it brings.

 Improved collaboration

Standardized API development makes life easier for developers, teams and third-party providers. With everyone aligned on API specifications, developers can build applications faster, with fewer headaches along the way. Software development teams can onboard new developers faster too. A new coder can jump in, read the API documentation and start coding with minimal friction.

Enhanced security and compliance

App security isn’t optional. One slip — such as weak API management — could expose sensitive data. API standardization helps developers and companies meet industry standards and compliance requirements such as GDPR, HIPAA and ISO. Following API integration standards also makes it easier to implement robust security features, such as secure authentication, access controls and encryption.

Scalable and future-proofed technology

With enterprise API standardization, you can scale without worrying about compatibility issues. Your applications can adapt to cloud, mobile or IoT (Internet of Things) solutions with ease, This boosts networking across systems, ensuring that disparate apps, devices and services can exchange information. And with API versioning, developers can manage changes to APIs and introduce new features with minimal disruption.

API versioning is particularly crucial in microservices architecture, where applications are built as a collection of independent services that communicate with each other through APIs. As a result, specific components of an application — such as payment processing or user authentication — can be developed and deployed independently, without impacting other parts of the application.

API standardization best practices

API standardization is the foundation on which great apps are built. But how exactly should you go about achieving it? Below, we’ll look at some best practices for API standardization that will guide you in the right direction.

First up, make sure you use standard API specifications. We touched on this above, but great APIs follow established standards that ensure uniformity, compatibility and interoperability at scale. For example, you can use:

• OpenAPI for structure
• JSON Schema for data formatting
• AsyncAPI for event-driven systems

Consistency is also crucial in API strategy. To ensure smooth collaboration, faster API development and fewer mistakes, we recommend using consistent naming conventions that everyone understands,

Furthermore, implementing API versioning enables developers to make improvements without disrupting the user experience. Older versions remain functional while new features are added. At the same time, automating API documentation using tools like Swagger ensures greater consistency while saving time and improving the developer experience.

To ensure quality, you can leverage automated testing and API linting to spot issues and ensure adherence to preset rules and standards. Governance frameworks can also help here by defining the policies and practices that guide API development in your organization.

API standardization use cases

We’ve covered a lot of the technical aspects involved in API standardization. Now, let’s explore how all that back-end goodness translates into real-world benefit. Below, we’ll explore three powerful use cases of API standardization.

Enterprise IT ecosystems

The push for digital transformation and automated processes means increasingly complex tech ecosystems. In 2023, organizations worldwide used an average of 112 SaaS apps. This issue is magnified in large enterprises, which often use a combination of third-party SaaS apps, proprietary software and legacy systems. If these different systems can’t “talk” to each other and exchange data seamlessly, it’s impossible to build efficient processes.

With standardized APIs, you can avoid this issue altogether. Instead of disjointed ecosystem software and overly complex workflows, you get seamless IT ecosystem integration and joined-up processes. As a result, enterprises can accelerate their digital transformation without running into technical issues or soaring costs. No wonder 97% of enterprise leaders agree that a successful API strategy is essential to future revenue and growth.

Financial services and open banking

Today, people expect financial services that are fast, cheap and digital. For service providers to deliver on these expectations, they must build financial systems that are seamless, secure and interoperable. This is where standardized APIs come in.

Modern financial services and FinTech products simply wouldn’t work without standardized APIs. For example, they enable you to:

• Make fast digital payments
• Get a credit score or apply for a loan in just a few clicks
• Check your investment portfolio in real time

And that’s just scratching the surface of how APIs have modernized legacy banking systems and services. Standardized APIs also ensure compliance with industry-specific regulations, such as PSD2 for open banking. This allows financial data to be shared between banks and third-party service providers securely and seamlessly.

Source: LibLab

Let’s look at a real-world example. Our client is a FinTech pioneer that launched the first digital-only banking services in the German market. With explosive growth and demand for seamless third-party integrations, their Ruby team was stretched thin. That’s where Intellias stepped in, We helped them keep their ambitious vision on track by building an adaptable API layer that effortlessly connects their core management platform to external services,

Challenges in API standardization

API standardization unlocks some incredible use cases powered by seamless integration and interoperability. But the road to that destination is not without its potholes. Typical challenges include:

• Integration with legacy systems. Legacy systems weren’t built for today’s API specifications. A 20-year-old mainframe may work fine up to a point, but things go wrong when you try to plug in a new API standard to an outdated interface.
• Balancing flexibility with control. Developers need the freedom to move fast and innovate. At the same time, businesses need to enforce API standards, security protocols and regulatory compliance. Finding the right balance can be difficult.
• Resistance to change. In some businesses, resistance to change among decision-makers and staff can be a barrier to API adoption. This is particularly true in large enterprises that still rely on legacy systems.

Below, we’ll look at how you can overcome these problems — and the positive outcomes you’ll enjoy as a result.

Overcoming these challenges isn’t always easy, but the payoff can be huge. Standardized APIs can help you cut costs, boost security and speed up development cycles. They turn a tangled IT mess into a sleek, future-ready system.

Intellias’s approach to API standardization

Without in-house expertise, the challenges we outlined above can be very difficult to overcome. But by working with an expert technology partner like Intellias, you can modernize your systems and build for the future, without disrupting the present. We can help you:

• Implement API standardization
• Improve API governance and documentation
• Overcome API integration issues with legacy systems
• Modernize your architecture by migrating to microservices
• Build modern API-first solutions from scratch
• Adopt the latest AI, ML and automation tools to speed up API development

We help businesses build powerful digital platforms from the ground up — starting with discovery and ending with scalable solutions that meet our customers’ unique needs.

Intellias platform development approach

The future of API standardization

In the coming years, API use usage looks set to soar. An increasing number of teams are shifting towards an API-first approach, prioritizing APIs as fundamental building blocks of software development instead of treating them as afterthoughts. This is driving new levels of innovation and scalability in digital services.

API development is evolving fast, with transformative technologies shaping use cases and standardization. For example, AI is having a huge impact on API management and governance, enabling developers to:

• Automate testing using machine learning (ML) algorithms that flag issues and enforce governance policies
• Deploy self-healing APIs that detect and solve issues within themselves, without the need for manual intervention
• Automatically generate and update API documentation in line with changes and updates

Adopting AI in these ways improves the quality and efficiency of API development. At the same time, it improves the developer experience by automating much of the tedious manual work involved in testing and debugging.

Beyond AI, low-code/no-code API platforms like SmartBear are changing the way businesses develop and test APIs. What was once a coders-only club is now open to virtually anyone. Now, a small business owner can whip up a standardized API to connect their e-shop with a payment app in a matter of hours.

Source: SmartBear

These technological innovations are set against a backdrop of improving API standardization. Industry-specific API standards are becoming increasingly important in highly regulated areas such as finance, healthcare and IoT. This is helping businesses create highly scalable and flexible digital services while ensuring compliance and security.

To sum up

APIs are a crucial building block in modern digital services. But without API standardization, businesses face security risks, inefficiencies and integration failures. By adopting API standardization best practices, companies can achieve seamless API integration and future-proof their software ecosystems.

To maximize the opportunity that API standardization offers, it pays to work with an expert technology partner. At Intellias, we can help you at every stage of your API journey — from digital consulting to bespoke software and platform development.