Why APIs Alone Aren't Enough: The Case for Open Ecosystems

Why APIs Alone Aren't Enough: The Case for Open Ecosystems

Why APIs Alone Aren't Enough: The Case for Open Ecosystems

Scott Carter

Scott Carter

As group executive of digital innovation at TSYS, Scott Carter is leading the charge to redefine the technology culture, products and infrastructure at TSYS.

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Application programming interfaces (APIs) are fashionable to talk about in the payments community these days. It's a pivot in our language, culture and the way we do business.

But the proliferation of APIs, and the open ecosystems where they exist, has created more than just a buzz in the payments industry. It's created real disruption that’s revolutionizing the way customers, banks and providers interact.

Walls that used to prevail between legacy payment providers, financial institutions and fintechs are being torn down. Proprietary capabilities, and even domains that used to be highly protected and confidential, are now being disclosed and shared with partners and software developers.

It's a brave new world of change in the payments space. And the transformation is being led by an open ecosystem for APIs where collaboration, integration and innovation lead the way.

All about APIs

Before we examine the open ecosystem, let's first review APIs. Essentially, an API is a written instruction; a simple guide that enables two devices, databases or applications to connect and share information. It's the behind-the-scenes software language that makes it easier for us to do things online or with our smartphones.

You and your customers likely use APIs every day. Maybe it's signing in to a new website using your existing social media logins. Or following a route on a search engine’s map. Or buying an airline ticket through a third-party vendor like Expedia. An API powers the communication between the travel intermediary and the airline.

Moreover, you can remotely adjust the temperature of a room by using an app that calls the API controlling your thermostat. Or buy movie tickets online with an API that verifies your credit card information.

The power of APIs is revolutionizing the ways businesses communicate with their customers and stakeholders. APIs are also generating new revenue streams for companies as both sales channels and as monetized assets. Industries of all varieties are adopting APIs to run their businesses more effectively and to better engage with end users.

Why open ecosystems matter

An open ecosystem is a collaborative, technology-based environment where diverse solutions and parties that agree to common terms of interaction can freely engage. It’s a website portal where software development meets commerce, technology drives exceptional customer experiences and APIs are stored and modified.

The process of working in an open ecosystem — where ideas and best practices are shared — is just as important as the APIs themselves. An open ecosystem promotes businesses working together to create more value than either of them could independently.

Also known as open architecture, the open ecosystem drives the API economy. It creates an entrepreneurial environment where the pace of development is swift and the speed to market is accelerated. It also results in a more flexible delivery of products to a variety of channels.

The Brave New World of Open Ecosystems

Ultimately, an open ecosystem is all about economic integration and sharing valuable assets and information to create favorable customer experiences. That’s what startups and developers are looking for in today’s API economy. They are looking for easy ways to integrate with your company. And they are looking for better ways to satisfy their customers.

How an open ecosystem works

The open ecosystem works one step at a time. From raw data and code to exceptional customer experiences, the process involves five steps.

Step One: Building Blocks

It starts with data, information and assets. Data provides the building blocks for development and innovation. Useful and usable data is the foundational architecture for programmers to create or modify software and applications.

Step Two: Opening Up

This step is about breaking down walls and making assets securely available through APIs as part of an open, collaborative ecosystem of developers and partners. Progress starts here by opening doors and giving others access to information and opportunities.

Step Three: Outside In

This step is about integrating partners, clients and outside developers into the API ecosystem where they can use data and information to develop new technologies. It’s about having a dynamic and easy-to-use API ecosystem where developers can hit the ground running.

Step Four: Something New

This is the creation step where developers and partners build innovative products and apps for commercial and consumer consumption. These products are made available through any and all distribution channels.

Step Five: A Better Way

And it all results in a better experience for the well-connected consumer looking for faster and easier ways to do things in today’s digital economy.

Engaging in the API economy

It’s beneficial for everyone to have an open ecosystem strategy that embraces interactions with not only existing clients, but also external parties who represent emerging partnerships. A growing number of companies in the payments space are opening up in this way by using secure and simple APIs to expose their complex ecosystems in new ways. Leaders in the industry are taking this approach to be closer to the forward edge of banking and to become a strong participant in the broader API economy.

This is a collaborative marketplace where fintech partners and software developers can access APIs and build on them to produce new products and services. The firms that successfully roll out and execute an API and open ecosystem strategy will drive innovation in payments and stay at the forefront of digital commerce.

The statements and opinions of the writer do not necessarily reflect those of TSYS.

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Scott Carter

As group executive of digital innovation at TSYS, Scott Carter is leading the charge to redefine the technology culture, products and infrastructure at TSYS. He is passionate about digital technology and leveraging it to engage customers, drive business value and streamline operational overhead.

With more than 20 years of experience in designing and building solutions for web, mobile, cloud and big data, Scott has personally experienced the dramatic shift in today’s technology landscape. His current focus is on building digital teams and infrastructure, underpinned by open technology, automation and machine learning, to create the next generation of payments solutions.

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