How APIs are transforming businesses in India to get future smart

If humans share information all the time, so do software systems - through Application Programming Interfaces (APIs). How does TwitterTrips integrate an individual's Instagram and Twitter photos and show them on a map? By communicating with other APIs, even if they are owned by different entities, be it Twitter, Google Maps or Instagram.

In the immediate aftermath of demonetisation in November 2016, how did Quikr operate CashNoCash, an application that directed users to the nearest ATM where cash was available and even told them how long they would have to wait in the queue? It did so with an API which used crowdsourced data. The online classifieds platform's recently launched "Pick Up Drop Off" service also uses its already existing logistics APIs as the base.

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API, a software intermediary that allows two applications to talk to each other, is what cloud applications and business applications use to communicate with one another, exchange data, allow "pass-through" transactions and more. If data is thought of as water held in different reservoirs, then APIs are the pipes that allow the water to flow between them.

They specify how software components should interact. They communicate internally within a system; they also provide it means of interacting with the services of external parties. They can execute the relevant code, manipulate data the way it is required and even manage basic error-handling. They make the implementation layer in online communication invisible, without giving away any more information than needed.

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When a customer enters his/her debit or credit card details, for example, his/her bank verifies the veracity of such information by using a public API such as Aadhaar; it does not need any other personal information about the customer. The bank carries out its back-end reconciliation and the customer gets his/her money or pays the bill within seconds.

No wonder, as a big part of the economy, especially consumer-facing businesses, has gone online, APIs are turning out to be huge revenue generators for businesses. A recent McKinsey analysis estimated that "as much as $1 trillion in total economic profit globally could be up for grabs through the redistribution of revenues across sectors within ecosystems. That makes APIs a significant competitive battleground capability in that they play a crucial role in linking organisations and technologies in ecosystems."

"APIs are an essential glue to bind online businesses with their partners' and service providers' ecosystems," says Prasun Mandal, Head, Technology and Analytics, Quikr. Its APIs provide mechanisms for software developers to create applications and features that interact with complex back-end systems.

Some examples of APIs used by Quikr's own platform are the ones used for returning relevant search results against users' search keywords, those that show similar listings to the one being viewed, those that retrieve details and images of a listing, those that show the online presence of a chat ad, and more. APIs ensure that the data extracted from one application is formatted and can be passed to another without any changes.

The growing popularity of cloud has also helped applications to communicate better. Earlier, most applications installed on premises were not allowed to exchange data with other applications. But now since they are available on cloud, it has become easier for them to exchange, communicate and work in sync with other applications.

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Banks, for example, have used APIs extremely well to build customer experiences. Loans, investments, bill payments and money transfers are just a few of the services that APIs enable. Two decades ago, banks took four to 10 days to disburse a personal loan; today APIs enable some of them to do so within five minutes.

Similarly, retail investors no longer need to fill tedious forms to put their money wherever they want, be it in mutual funds, stocks or a host of other instruments - they can do so at the click of a few online buttons, thanks to APIs. "A combination of Internet availability, smartphone penetration and APIs has enabled all kinds of services to reach more and more people," says Hrushikesh Mehta, Country Manager - India, ClearScore, a global fintech firm. "APIs are really the backbone of such achievement."

Rapid Growth

APIs are helping companies address new market opportunities and empowering developers to use core business services to continuously build, refine and deploy apps and make them available to users. "Moreover, companies that enable their assets with APIs can easily monetise investments in their application logic and business data," says Ankit Mehrotra, Co-founder & CEO, Dineout - a leading dining out platform and restaurant tech solutions company. "With effective implementation of APIs, companies can cut costs, improve efficiencies, and thereby their bottom lines."

Software companies are benefitting hugely as many corporations invest heavily in the API economy, realising its importance as a sustainable avenue for creating new services and increasing revenues. A leading multinational bank, for instance, recently got Infosys to install over 5,000 point-to-point APIs to connect its back-end systems to the customer care facing ones.

Tata Consultancy Services (TCS) has built an "Open Banking API Network" which has helped several banks accelerate their digital transformation journey by securely abstracting and carefully sharing customer data for internal and external consumption. Mphasis has adopted an API-first approach to design, develop and manage scalable, commercialised APIs.

APIs have helped HCL create a channel to sell its products and services online. These software intermediaries enable access to services by adding codes to applications. With Azure API Management, a software developer has immediate access to all the core competencies needed to ensure a successful API programme.

In 2018, there were 88 investments globally in API companies with an average deal size of $12.1 million. Investments in API companies rose from $480 million in 2016 to $495 million in 2017 and more than doubled to $1.06 billion in 2018 - mergers and acquisitions of API companies rose 32 per cent in 2018 over the previous year.

The API economy is the enabler that turns a business into a platform. Data from RapidAPI - the world's largest API marketplace, where over half a million developers connect to thousands of public APIs - shows that there were 25 acquisitions of API companies in 2018.

The largest deal was MuleSoft ($6.5 billion), acquired by Salesforce. PayU acquired Zooz for $80m-$100million. Twilio acquired SendGrid for $2 billion. At present, there are around 30,000 APIs in existence, according to Programmable Web, the world's largest API repository.

In India, APIs are growing even faster than in the rest of the world. Of the organisations which participated in a recent global study by CA Technologies, 91 per cent of those from India said they were adopting APIs, and 85 per cent were confident this would help them distinguish themselves from the competition.

Indian companies are using APIs to integrate with different systems and focus more on their core business. E-commerce companies can now concentrate on products and discounts, without worrying about building the payment process, which is taken care of by bank APIs. They have been growing quickly since the rise of APIs, as it is no more a problem for them to adapt to changing computer languages and means of communication between services.

Earlier, companies would create different non-digital - or a combination of digital and non-digital - ways to authenticate the veracity of the information provided by a user. With the coming of Aadhaar, they can now build a digital platform using just Aadhaar verification.

What is now possible is a digital handshake whereby information about an individual is passed on to the Aadhaar system and thereby checked. Applications are no longer responsible for individual information about their users. They can be sure that whatever information has been provided is authenticated by the Aadhaar system via APIs.

Widespread Use

APIs have been adopted across all kinds of consumer-facing sectors - e-commerce, hospitality, transport, banking, payment wallets, food tech and fintech. "APIs are the cornerstone of the digital future," says Mehrotra of Dineout. "Even in the business to business space, software-as-a-service (SaaS) players have understood its importance and are warming up to API integrations for partnerships as the industry is evolving and clients are demanding more cost-effective, seamless experiences and better data analytics."

There are now apps around packers and movers, renting trucks for transport, housemaid services, food delivery services, etc. - and all these use APIs. "In recent years, the growth rate of APIs across India's e-commerce and entertainment sectors has been very high. Legacy businesses also seem to be moving in the same direction," says Parikshit Dar, Co-founder and Director, BookMyShow, which provides a single step online movie theatre booking experience. "Every feature at BookMyShow is built around APIs. There are about 200 services exposing around 1,000 plus APIs to give customers a complete and seamless experience."

The numerous possibilities APIs offer are changing the way businesses work. APIs extend the reach of an organisation and open new markets, as they allow application developers to leverage, publicise and aggregate assets for broad-based consumption.

In consumer facing as well as B2B SaaS business, all partnerships and integrations are being carried out via APIs. Businesses are utilising APIs to uncover new marketing opportunities - targeting offers to people looking for new solutions. By now, all cloud-based private tech businesses in India have APIs in place.

The government, too, has become very active in the API economy, with initiatives such as https://aadhaarapi.com/ and https://indiastack.org. It has various APIs on data.gov.in, which provide data on weather, air quality, elections, commodity prices, various government schemes and more, which can be leveraged by businesses.

The huge amount of data collected and made available is giving analysts answers to varied and granular questions. APIs are opening new pathways to information and insights, sparking innovative analytics, powering the mobile applications of every business and being used heavily in the Internet of Things (IoT) devices to connect to the cloud.

Closer Look

Dineout uses APIs for both internal and external integration. It has three separate product suites which complement one another - "Dineout", which drives business to restaurants and helps customers pay using their smartphones, "inResto", a customer relationship management software, which includes reservations, feedback, loyalty programmes and taking home delivery orders, and "Torqus", which helps restaurants manage their daily operations such as billing, inventory and supply chain management.

"We are able to provide all these only because we use APIs," says Mehrotra. Dineout provides APIs to its partners, enabling them to offer restaurant table reservations and payments through its platform. The partner can monetise and create a new business on top of Dineout's APIs, thus allowing Dineout the access to a larger distribution channel through the partner, while the partner earns additional revenue on top of its core business.

It is the same story at Quikr. "All our user-facing and partner-facing platforms, internal automation systems, data science platforms and integrations with external partners use APIs," says Mandal. "APIs enable our vertical platforms to interface with the core platform, thus avoiding the need for each vertical to build those core capabilities independently. Similarly, notifications to our user base are sent through one common engine, which in turn exposes the APIs to all the verticals that tap into the APIs used to communicate with audiences. Quikr has tens of thousands of APIs, and they are used to power a range of system capabilities."

To The New is a digital technology company. "We do not have a product offering of our own where we build publically consumable APIs. However, we consume different public APIs in order to build B2B applications for businesses," says Narinder Kumar, EVP-Technology Services at TO THE NEW. Its clients include HDFC Mutual Fund, for which it has built a distributor portal and an investor portal through which consumers can invest their savings in various funds.

Another of its clients is Tata Sky, whose Over-the-Top mobile application and web portal it has built. Tata Sky subscribers can consume their content not only on TV through their set-top boxes, but also through the mobile application and web portal once they are authenticated through private APIs of Tata Sky.

Similarly, ClearScore uses APIs extensively. "APIs are used in almost every facet of our business," says Mehta. "We use them to transfer consumer details and consent to bureaus, retrieve credit information, provide pre-approved offers to consumers and applications to lenders. APIs help us create a product that helps consumers understand their credit score and finances. Most importantly, APIs have facilitated our ability to drive financial literacy (the credit score and report in addition to a whole host of products) and financial inclusion at scale," he further adds.

(The author is a Delhi based writer & blogger on BFSI Industry.)