What is API Economy?

API economy: A Quick Overview

Experiencing the greatest boom of all the times, the API economy is established on the use of APIs and the upshots they bring. Linked directly with the digital economy, it can be considered a business prototype that deals in the comprehensive use of API and capital outflow/inflow generated by the use of APIs. 

As we all know, APIs are vital for making applications competent to communicate with clients and servers. 

With API, the communication channel isn’t completed. API economy tries to measure the API exposure in a given ecosystem and the extent to which APIs are contributing toward revenue generation.

The digital transformation that every growth-seeking business aspires for isn’t going to happen without the use of API as this is what makes application integration and communication possible. 

Inflation in the digital economy boosts the API economy. However, effective API utilization and consumption are essential for steady API economy growth. In the simple API economy definition, the extension is the API usage, the complex is the API economy. 

A Real-life Example

When more than 40% of large organizations are using above 250 APIs at the time, API economy examples are everywhere. The only thing you need is an eagle’s eye to spot them. 

Uber is the best real-life example of how a business is growing via the API economy. The business is built on APIs only. Google API is used for map-related services, Slack APIs are used for business-customer communication. Most of the app’s components are outsourced from the API economy. 

Why is the API economy important in business?

If we see broadly, API economy has a direct impact on businesses and their operations as the primary component, API, is used widely in business. Its core focus is to promote/encourage the practice of user-centric APIs generation that can facilitate businesses to leverage business-customer communication, improve operational capability, instantly share mission-critical data, and speed up service delivery. 

API economy serves as a means to enjoy better data integration and simplified software components. This holds great significance for businesses having limited resource accessibility. Such businesses fail to have an in-house API development system due to reasons such as capital crunch, talent shortage, and so on. 

API economy ensures that commercial APIs are easily accessible by anyone. As it features many API vendors, average API obtaining costs subside greatly. Such immediate and cost-optimized accessibility to API empowers businesses and accelerates application development. 

In addition, having an API-focused development promotes scalability. API economy brings various resourceful third-party apps or microservices to businesses’ disposal and grants them an opportunity to expand without any worries. 

However, businesses have to be extra vigilant on certain fronts to get maximum benefits from the booming API economy. For instance, businesses must choose the right API platform, have an API usage strategy in place and access the API revenue generation possibilities beforehand. If these aspects are well taken care of, businesses can reap lucrative benefits from the API economy. 

Pros and cons of the API economy

API economy meaning isn’t complete if we don’t understand its pros and cons. Let’s talk about the pros of the API economy first to set up a positive tone. 

• API economy promotes API usage by making it easily accessible. It brings API service providers/end-users to a single place and provides them an opportunity to collaborate without hassles. 
• When pre-made, extensively tested, and ready-to-use APIs are at businesses’ disposal, quick time to market is certain. Businesses don’t have to get involved in exhaustive development and API testing. 
• Continual refinement and innovation are possible as APIs are highly flexible and support customization from beginning to end. Businesses can easily modify used APIs and create applications/software that their customers are seeking. 
• Because of the above reasons, the API economy promotes a better customer experience as customers get what they were looking for. Such need-focused applications/software also have higher customer engagement. 
• The API economy is supporting speedy delivery, which is the need of the moment. It serves as an open-source platform from which industries of all sorts can procure approved API tools and start the development instantly.
• The direct impact of all these is on revenue generation. When product development is quick, less resource-extensive, and highly customized, more revenue and higher ROI are certain. 

Before you gleam with happiness, let us tell you that the API economy is not always that lucrative. It comes with a fair share of shortcomings. The most notable cons of API economy are as mentioned below. 

• As the size of the API database expands, businesses have to struggle hard to control the API access. It takes a lot more than what’s expected to keep tabs on limited and verified API access by vendors, partners, and customers. 
• Higher API usage increases the API security burden and forces organizations to enforce strict security practices, which could be expensive and exhaustive. 
• When APIs go through so many hands before reaching the customer, API security risks certainly double up. 
• Directly or indirectly, the API economy promotes data abuse. Every data that is part of the API economy is likely to be shared by other members, whether or not a business does that. This promotes data abuse. 
• API aggregators are also an issue that takes birth because of the API economy. It refers to excessive consumption of API by one consumer and establishing its monopoly. It harms the healthy competition in the market. 

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API Security 101: How Wallarm will help improve the API economy

The API economy is not a short-term stint. As the use of API is increasing every day, the API economy is going to stay here for many years to come. If you’re a business seeking the highest possible outcomes for the APIs used, try using Wallarm, a fully-automated and feature-rich API security platform. 

API economy relies on API quality. If APIs are poorly constructed or inadequatety-secure, it will take only a fraction of a second for the whole API economy to collapse. 

With solutions like Cloud WAF, GoTestWAF, and API Security Platform, Wallarm plays a great role in improving and strengthening the API economy. 

‍Cloud WAF is an ultra-modern WAF that can protect APIs, microservices, and serverless workloads with the same perfection and accuracy. As the WAF is known to deliver zero-false positives, its usage is highly recommended. 

‍GoTestWAF offers an API testing simulation ecosystem using which organizations can test the security level of the APIs and spot any loopholes in the beginning stage. 

The extensive assistance of the API Security platform applies to all sorts of APIs and is great to have a unified API threat detection, resolutions, and testing solution. 

API-driven can use these solutions to: 

Do early API threat detection and remedial

• Improve the security 
• Trim down the API risks 
• Ensure API usage only by verified users 
• Implement API authentication and authorization practices 

Try it once and you’ll be able to improve the quality of APIs and make the API economy stronger than ever.