API Definition

APIs, or application programming interfaces, are the translators of the technology world. In the simplest terms, they connect different data sources and allow them to communicate with each other.

The name “application programming interface” provides additional clarity into what an API is:

– Application: Businesses develop applications to store and process data for important business goals, such as inventory management, production, and order fulfillment. One business may have many different applications.

– Programming: This is the act of building the application, by defining what it does and how it does it. There are different types of programming languages, each purpose-built to achieve a specific result (like speed), or to be optimized for a specific use case. Since each application serves a unique purpose, they often use different programming languages and system structures, even within the same business.

– Interface: The mechanism by which two different applications can interact with each other and share data.

An API works by connecting two or more business applications, likely with different programming languages and system architecture, and allowing data to pass from one to the other. As the name suggests, the API is the interface between the applications.

There are many different types of APIs. Here are a few of the most common categories:




4. Web APIs


REST, or representational state transfer, APIs are fairly fast, simple, flexible APIs. They allow developers to use HTTP functions to send requests and receive responses. There are four core commands that a REST API executes: GET, PUT, POST and DELETE. This type of API has become increasingly popular with the rise of Web Services.


SOAP, or simple object access protocol, APIs are more complex and are built for XML-based systems and programming. (XML stands for Extensible Markup Language; while it’s not a programming language, it’s related in that it defines how data is organized.) SOAP APIs are useful when the data being communicated is more expansive and more sensitive, because they provide seamless data communication and better security.


RPC, or remote procedure call, APIs are older and simpler than the other two types of APIs. They’re built to transfer data or execute code on a different server. RPC APIs are built for either XML or JSON (JavaScript Object Notation) format protocols. You may see them referred to as XML-RPC APIs or JSON-RPC APIs.

Web APIs

A web API is simply an API that can be accessed over the web using an HTTP protocol. Any of these three types of APIs can be used as a web API.

There’s also a difference between public and private APIs. Public APIs (sometimes referred to as “open APIs”) are designed to be accessible. Private APIs are typically built for internal use only. A third category of API, the Partner API, typically connects two otherwise private applications for a defined business purpose.

APIs are everywhere

Versatile, powerful, and accessible, APIs have come to reflect the demands of our modern, connected era.

One of the most widely used APIs in the world? Facebook’s. Facebook’s API securely and quickly communicates Facebook data with untold numbers of other applications. The API can be used to login to secondary platforms and apps using Facebook information, scheduling posts, engaging with content, chatting with customers, and more. But Facebook’s popular API is just one example. From Salesforce’s introduction of the first modern API in 2000, APIs have skyrocketed in popularity, prevalence, and usage. Today, there are over 24,000 public APIs, helping to power almost every moment you spend online. The average person uses APIs every day to do things like:

– Check the weather on their phone

– Post a photo to Instagram

– Share a GIF with a friend in a text message

– Log into an account with Google or Facebook

– Pay with PayPal

– Purchase a flight from Expedia

In our connected and complex digital world, APIs bring everything together. Similarly, because APIs allow businesses to connect vast amounts of public and proprietary data, they are helping companies fuel innovation, identify opportunities, and better serve customers.

APIs in Business

A direct-to-consumer ecommerce store might leverage APIs so their customers can log in to their account using Google and pay with PayPal. With ad retargeting via Facebook, APIs help the store’s marketing messages reach its target audience. And B2B businesses benefit from APIs, too. With the right APIs, B2B companies can aggregate and analyze performance data across business areas, identify trends, and even flag risks. Here are just a few examples:

– Marketing uses an API to conduct social listening and track emails.

– Sales use APIs to identify target accounts and collect contact information.

– Operations uses APIs to accept online payments.

– Compliance uses APIs to ensure security and conduct audits.

APIs are uniquely valuable to financial institutions.

Take consumer banking, for example. Preferences for digital banking methods are accelerating, spurred on by the pandemic. An American Bankers Association survey of bank consumers found that through the pandemic, 70% of bank customers used online banking or mobile apps compared to 57% pre-pandemic.

APIs power a quality digital banking experience for consumers: from logging in securely and checking an account balance or credit score to transferring money and paying bills. And on the institution side, APIs enhance risk management, compliance, and sales. The risk department of a financial institution may use APIs to identify at-risk accounts, while the compliance team could use an API for identity authentication.

With their critical role as connectors, APIs allow financial institutions to unlock the next frontier of digital financial services. Versatile and accessible, APIs have come to reflect the reality of our modern, integrated, digital world.