API-first vs. API-based: What is the difference?

The terms API-based and API-first are often used interchangeably, particularly in core banking and fintech lexicon. However, these terms are not equal; in fact, there are important distinctions between the two. Here we will explore the definitions of these terms, and examine why we at Tuum have opted for an API-first approach towards developing our platform.

Application programming interfaces (APIs), and the API economy, have become business critical assets to companies operating in the digital age. The ability of companies in all sectors to effectively integrate well-designed APIs into their systems, and use them in a way that best supports their objectives, can prove to be a main differentiator in how well their operations can scale. Before examining the differences between API-first and API-based, let’s first ask:

What is an API?

An API is a software intermediary which enables an application to interact with external applications, operating systems, microservices, or data. They can be used to enable automation and straight-through-processing, as well as for pooling and analysing various data sources. As a result, APIs both simplify application development and also unlock new opportunities for innovation.

The technical design process for an API is well-defined, with design patterns such as REST and HATEOAS supporting standardisation and helping developers to avoid mistakes. As a result, modern APIs are developer-friendly, self-described, easily accessible, and broadly understood.

Read on: How can APIs contribute to your business success?

APIs have allowed developers to reimagine software architectures, giving rise to API-based and API-first platforms. Although these terms sound similar, there are important distinctions between them.

The meaning of API-based

When something is described as being API-based, it is referring to a platform that has APIs added on top of it. By doing so, companies can make improvements in the areas of automation and integration. Additionally, by adding APIs to the platform, companies can access some of the underlying functionality of the software – but not all of it.

Undoubtedly, there are benefits to being API-based, but this approach does not unlock the full potential of APIs. What if development could be re-imagined to centre around APIs, placing them at the heart of the platform?

What is an API-first approach?

APIs have been around for roughly two decades now, but the concept of an API-first approach is something that has gained traction with developers in just the past few years.

An API-first approach involves building software products around APIs from the ground up, as opposed to building the product first and later adding API layers. 

As companies have moved towards omnichannel strategies, the popularity of an API-first approach has accelerated. There are now numerous ways for people to interact with an application, and an API-first approach ensures that these interactions are seamless, and that the applications are scalable. 

The benefits of an API-first approach

There are many benefits to an API-first approach, chief amongst these being:

Reduced cost and time to market

An API-first approach allows for multiple APIs to be developed simultaneously, naturally resulting in a reduction in both the cost and time to market. It is also possible to add new services and technologies to applications without having to alter the system architecture.

Reduced risk of failure

As an API-first approach promotes standardisation across the organisation, it reduces the risk that there will be an application failure. This approach ensures that APIs are reliable, consistent, and easy for developers to use.

Teams work in parallel

With an API-first approach, there is an established contract between services that is followed by teams throughout the organisation, enabling different teams to work on multiple APIs at the same time. There is no need to wait for updates to be released before moving on to another API.

Additionally, teams can mock APIs and test API dependencies based on the established API definition.

Increased scalability

By putting APIs at the heart of the platform, the ability to deploy and replicate different applications becomes simplified. This improved efficiency naturally lends itself to an increase in scalability, as applications can be rolled out for new jurisdictions with ease. 

Future-proof applications

APIs unlock data and digital capabilities, ultimately resulting in an organisation that is more composable. The API-first approach ensures that integration assets are reusable, reducing the time and cost of any future projects.

API-first core banking

APIs used in core banking support primary banking services like opening bank accounts and making domestic or international deposits. Tuum leverages an API-first approach to provide an exclusive access point to our business logic, thus enabling our customers to create and configure their own digital banking products or services on our platform. With an API-first approach, we ensure the focus is on the design, rather than the development, of the API.

To ensure Tuum’s APIs are built for success, our developers assess their work against the following checklist:

  • Does it contain all the necessary information relevant to your business domain?
  • Does it minimise API payloads, optimising for the fastest response times possible?
  • Is the hygiene of good security practices such as authentication, authorisation and encryption, versioning, error handling or filtering assured?

API-first platforms give businesses the edge over their competitors by providing more flexibility, scalability, and control. By adopting an API-first approach, we at Tuum have ensured our platform is built to handle the needs of our customers today and long into the future.

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