Increasing Revenue With Open APIs
This blog accompanies our series of webinars on the ROI of API Management. This fifth edition discusses how to increase revenue with open APIs.
The use of open APIs in banking, healthcare, insurance, and other industries has not only increased interoperability between parties, but has also led to revenue growth with increased customer retention, new products, and new partnerships.
What Are Open APIs?
An open API is a public API whereby the term "open" refers to "open standards." These are industry-agreed standards for their particular vertical. In the banking, healthcare, and telecommunications industries, for example, there are standards that foster interoperability, innovation, and reuse.
As they are publicly available, they can be accessed by all developers to enhance their own applications. With this availability to a community of developers, open APIs can be leveraged by organizations to create innovative uses of their applications, adding value to their core business.
Anatomy of an Open API
An application program interface (API) provides access to external parties to your data and business processes.
The diagram below illustrates the typical flow from a core system to the public. Most backend systems were never built to expose information or access directly; this is where microservices and APIs come into play.
A microservice is built to do one thing, and do that one thing well. Often, a set of microservices need to be strung together to form a transaction, and that's where APIs fit into the architecture. APIs and API management platforms have the capability to expose a single interface which aggregates multiple microservices.
Through the use of microservices and an API interface, data and access is provided to external consumers or channels.
What Open APIs Enable
If more organizations follow the standards in their verticals, there will be many benefits. Open APIs, in general, provide:
- Business agility and interoperability by supporting an architecture based on modularity and reuse where capabilities are exposed through industry agreed Open APIs.
- Partnering for new services the Open APIs enable new products and services to be created by providing services to, and consuming services from, other business units, subsidiaries and external 3rd parties and other verticals.
- Simplification of the IT estate by enabling systems rationalization.
- Reduced time to market by enabling the configuration and reconfiguration of systems and capabilities through Open APIs to deliver new business solutions.
- Improved customer satisfaction by offering more choices, control over their personal data and access to innovative 3rd party solutions.
Open API Initiatives
Open APIs have been around in a number of industries for some time now, with some more mature than others.
Open banking is the poster child of open APIs, having been around for a few years, and centers around the practice of sharing financial data electronically and securely. This was driven by regulatory changes in the EU and UK with initiatives like PSD2 and GDPR. Banks were initially not very happy as these changes were forced on them, but the value has begun to emerge in recent months.
In healthcare, FHIR (pronounced "fire") is a data exchange standard developed to provide a unified, standardized interface between healthcare providers. Learn more about FHIR APIs.
Open insurance lags behind banking but has seen a lot of activity recently. By providing customer data, insurers can make use of developers to bring new services, create a seamless customer experience, increase efficiency in claims processing, and grow customer acquisition channels.
Related >> Are you an insurance carrier? See how the implementation of the Akana API management platform can benefit your organization >> Start Your Analysis Here
Increased Revenue With Open APIs
We will take a look at two industries in particular, banking and healthcare, to illustrate how open APIs can increase revenue.
Open banking APIs are the secure way to give providers access to your financial information. APIs are the "secret sauce" in the open banking revolution, helping to extend customer reach, stimulate innovation, and increase revenue. Financial service providers have realized they must embrace modern technologies and leverage the data held in their systems to secure their long-term futures.
How APIs increase revenue in banking:
- Compliance: Of course, compliance isn’t about driving additional revenue: it’s about staying in business. With that said, one could say that compliance improves profitability by avoiding unnecessary fines and fees.
- Digital Agility: An improved digital infrastructure enables data to be better used internally to improve the customer experience, thereby increasing customer lifetime value.
- API-as-a-Product: By developing and selling access to new API products, banks are able to create additional direct revenue streams. These premium APIs can also be used as up-sells or cross-sells for other banking products (such as certain corporate accounts).
- Increased Customer Satisfaction: Since the customer is more satisfied with their banking experience, they are less likely to look for alternatives. This increases customer lifetime value, improving long-term profitability in a predictable way.
- Collaboration: By building collaborative relationships with third-party financial services companies, banks are able to create unique value propositions and employ creative marketing strategies, thereby winning new customers.
- Increased Customer Base: Whereas banks could previously only offer additional financial products and services contingent on banking data to their own customers, they can now serve customers of other banks, with the potential for significantly more revenue.
FHIR provides a standard data exchange format between patient and provider. The vision is a world in which everyone can securely access and use the right health data when and where they need it.
APIs increase revenue in the healthcare industry with:
- Electronic Data Capture at Source: A standardized approach makes sure data gets captured accurately and is transferred correctly from provider to provider.
- Real-World Evidence: Deriving data from electronic health records and systems.
- Personalized Care Treatment: Know your patient, give them the personal care they deserve.
- Improved Diagnostics: AI assisted diagnostics — once your data is in an electronic format, diagnosis is sped up.
- Preventative Care: "Big data" in healthcare systems — knowing who you are, preexisting conditions, your medical history — can provide better preventative care.
- Innovation: Giving third-party developers and organizations access to these open standards allows them to come up with innovative solutions and unlock new capabilities for your organization.
For greater detail on all the above points, we encourage you to view the full webinar below:
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