In recent years, as API application has risen, various industries have grown eager to open APIs. An API (which stands for Application Programming Interface), is a bridge of communication and connection between different software intermediaries. It helps developers save time and effort, while also providing new digital products and business models for digital services, as well as establishing new business channels.

The concept of “Open API” has two major characteristics: one is standardization, which indicates that the format of the APIs is unified and the data of both involved parties can be mutually used and analyzed, and the second is scale, indicating the ability to drive more potential customers to use third-party services. At the same time, with Open APIs, databases can be expanded and more profits can be gained by reaching new customer groups through traffic.

With the development of APIs and the rise of their applications, so-called open APIs have been released to the market. To put it simply, enterprises and other organizations can use Open APIs for external personnel (service providers or application developers) to access and use. Through API connections, related businesses can also develop different services and provide more diversified choices, thereby expanding the ecosystem of their business.

A good example of Open API usage would be a bus tracking app for checking the live arrival time of buses. Relevant units provide and open APIs for information like bus arrival times so that private service providers can access them and then design related products, both for web and mobile phones.

Another example can be found during the early COVID-19 outbreak stage in Taiwan, when masks were in short supply. In order to let the public know the locations where masks could be bought and how many were left in stock, the National Health Insurance Administration of the Ministry of Health and Welfare opened up mask inventory and query-related APIs so that developers could use these to design related applications and provide them to the Taiwanese public.

Figure 1: Use of Open API

Open API Trends

The first step in this development trend is to “open” APIs. The main intention behind this is to bring more innovation to the industry through Open APIs, all while opening up unlimited business opportunities.

According to a forecast by CRIFAX, the advent of the 5G era will further drive the growth of Open APIs. CRIFAX estimates that the number of connected mobile phones worldwide will grow to 20 billion in the next two years. In response to this trend, companies in the fields of IT, telecommunications, and internet services are also actively pursuing digital transformation while promoting the growth of the Open API market within the next 6 to 7 years.

Due to the development of Open APIs, the demand for API lifecycle management (FLAPIM) tools has also grown. In 2019, the global FLAPIM market grew by 36%, bringing business opportunities of US$1.7 billion. This figure makes it the third fastest growing industry in the Alternative Investment Market (AIM). Until 2023, the compound annual growth rate (CAGR) of the FLAPIM market is estimated to reach 23%, bringing about US$1.5 billion in business opportunities. North America is predicted to be the region with the fastest development and highest market share in the Open API industry. Because of the continuous growth rate and high expectations for future growth, various international companies have also invested in the development of FLAPIM-related management tools.

Figure 2: API management CAGR is estimated to grow by 32.9% in 2023 (Ref: Mr. Shelly Singh (2018), API Management Market worth $5.1 billion by 2023)

Challenges

The foundation of Open APIs is making your own services or data accessible to others. As a result, it faces the following challenges：

1. Data standardization: API development standards vary from one company to another. The key is to formulate API interface standards and unify the API formats, allowing data to be mutually used and analyzed.

Data security: Naturally, ensuring the privacy, integrity, and non-modification of data has also become a major challenge for the Open API industry.

API lifecycle management: Unlike an enterprise's own AP Server, Open API means opening up APIs to external personnel. Therefore, the enterprise must take on the management of API inventory, development, deployment, listing/removal, and use authorization. This is a key aspect which corporations and customers both need to consider.

API management tools are essential to standardize, secure, and manage APIs. They provide enterprises with a system to create and publish APIs, enforce usage policies, control access, and manage traffic, and gather usage statistics. digiRunner is an API management platform developed by TPIsoftware for the Open API market. It follows the Open API Architecture (OAS) 100%, allowing enterprise users to easily manage and open their APIs to partners. digiRunner is powered by a rigorous information security mechanism, providing a variety of API authorization modes and data encryption functions, such as API Key, and Authorization Code Flow, which not only saves development time, but also greatly reduces information security concerns.

Figure 3: API Lifecycle Management (Ref: TPIsoftware)

Future Development

Open APIs have been widely used in various industries, the most famous being Open Banking, which was born in Europe in 2015. Through Open APIs, banks enable third-party service providers (TSP) to build applications and services around financial institutions. From public data to private data, it provides account holders with greater financial transparency options. It is only through the opening of APIs that these functions can be made available.

Other industries, such as government platforms (Open Governance), insurance (Open Insurance), and healthcare (Open HealthCare), have also joined the ranks of Open APIs, hoping that opening their services through APIs will bring innovation and growth to their industry ecosphere. Moreover, Open APIs have also been used in the Digital Container Shipping Association (DCSA) for the information standardization of the container shipping field, to promote the digital transformation of the entire industry.

Open APIs open up unlimited possibilities for enterprises across various industries. Through the usage and packaging of APIs, more diversified services can be provided to the market. When cooperating with different types of service developers, in addition to expanding business and cooperation channels, enterprises can also usher in another wave of business opportunities and innovation, making it a win-win situation for both companies and consumers.

Figure 4: Open API Ecosphere (Ref: Kevin Moseri (2016), Why should banks embrace an open API ecosystem?)

About TPIsoftware

TPIsoftware is the no. 1 FinTech software company in Taiwan providing proprietary iPaaS middle platform DigiFusion and conversational AI product SysTalk.ai domestically and overseas. TPIsoftware also offers comprehensive software solutions and cloud services with extensive cross-national project experiences. Globally recognized, it is trusted by customers across industries such as BFSI, government, retail, e-commerce, manufacturing, healthcare and more.

Media Contact

Peggy Tsai

+886-2-2658-0508 #1606

peggy.tsai@tpisoftware.com

What are Open APIs?

Open API Trends

Challenges

Future Development

Open API Trends & Applications

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