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APIs vs. REST APIs – everything you need to know about integrating financial solutions


Following a recent trend, some companies from across the globe have been going out of their way to emphasise their preference for REST APIs, instead of the good-old-fashioned API without a prefix. This, unsurprisingly, has generated not only a moderate amount of buzz and excitement, but also confusion regarding the difference between the two juxtaposed alternatives. 

To help you make sense of this, in this article we’ll provide a brief, potted history of APIs; go over the differences between REST and traditional APIs; and, finally, conclude with an outline of the benefits of integrating financial solutions via the API technology.

Let’s dig in!

APIs through history

What might be termed proto-APIs were born in the 1950s, yet the name and broader real-world applications only emerged in the late 60s and 70s, at which time “API” was understood to be the interaction of a single application with the rest of a computer system.

In the 1980s, with computer networks becoming more widespread, APIs enabled programmers to access libraries stored not just on their own computers, but also on those located elsewhere in the network. 

The first web APIs – which is what most people mean by the term “API” today – began showing up in the 1990s, following the birth of the Internet, and then exploded onto the scene commercially in the early 2000s. APIs were behind numerous revolutionary business models, including those of tech giants like Amazon, Salesforce, and eBay.

In the 2010s, applications linked to social media platforms, which started their rapid ascent just a few years prior, set the stage for new-generation APIs. These made it easy for companies to integrate their IT systems with third-party services and cloud platforms, as well as to extend the reach of their applications globally.

Finally, in the 2020s – and especially since the pandemic, which increased our reliance on web services dramatically – the popularity of APIs has continued to grow. Today, the Internet of Things (IoT), advanced AI solutions, cloud-native applications, and much else depends to a large extent on APIs. In fact, developers are now often choosing to build the API first, and only then proceed to the application itself.

What distinguishes REST APIs from APIs?

First of all, REST and traditional APIs differ in only a handful of ways. Here are the most significant of them:

  • REST (Representational State Transfer) APIs adhere to a specific architectural style, whereas traditional APIs encompass all interfaces for system-to-system communication.
  • Traditional APIs can operate across multiple protocols, while their RESTful counterparts predominantly use HTTP requests.
  • RESTful APIs promote statelessness (whereby each request is treated independently of any prior or future requests), while traditional APIs occasionally require additional context to function.

Secondly, and most importantly – REST APIs have been the default type of API for quite a while now. In other words, companies who offer integration via APIs are pretty much all using REST APIs. 

With very few exceptions, companies that put an emphasis on using REST APIs are merely seeking to boost their market profile and to give customers the illusion of providing them with something ground-breaking and innovative – or at least superior. Put another way, in this context, the “REST” part of “REST API” is simply used as an impressive-sounding industry buzzword.

In reality, however, any developer who’s been using and/or implementing APIs for the past number of years will tell you that, for all intents and purposes, there simply isn’t any meaningful difference here – REST APIs are just the APIs we’re all using now. 

Benefits of integrating financial solutions via APIs

Now that we cleared up the confusion, let’s take a brief look at the benefits you can expect to derive from integrating financial solutions via APIs:

  • With an API, you can usually continue to use your own system’s interface for all the financial service modules you require. Beyond simple convenience, this saves both time and money that would otherwise have to be spent on things like contracting additional development services and providing your employees with extra training.
  • No less importantly, integration via an API enables you to manage all of your funds and accounts from the comfort of your own system. 
  • Last but not least, with an API you’ll be able to retain full control over the visual appearance of your client-facing dashboard. This is crucial for achieving a seamless experience, unsullied by the need to constantly switch back and forth between different third-party platforms.

In conclusion

The API technology is immensely powerful, flexible, and versatile, which explains its popularity that continues to grow decades down the line. That being said, not everything touted as new and revolutionary actually is what it claims to be. As you’re probably well aware – the tech world is not beyond the occasional reliance on hype, which should always be kept in mind when learning about new developments therein.

Finally, it also bears repeating that, despite the undue hype, RESTful APIs, which are now standard, provide arguably the best way of integrating financial services into your system

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