20 Oct 2022
working on a computer code

In the digital economy, how can you leverage APIs to seize new business opportunities?

Wolter Jalink

Partner, Head of Technology Transformation | EY Switzerland

Experienced Senior Technology Strategy Advisor, supporting organizations in technology enabled transformation.

Julian Segantini

Director, Technology Strategy Lead | EY Switzerland

Seasoned IT Strategy and Transformation specialist, leveraging technology to create tangible business value for our clients.

20 Oct 2022

By connecting information systems, APIs are the cornerstone of business transactions in today’s increasingly digital economy.

In brief

  • APIs are the cornerstone of the digital economy by connecting information systems
  • Harnessing the power of APIs allows organization to create more integrated and omnichannel services with their ecosystem of clients, partners, providers and regulators 
  • Carefully managing the API lifecycle is a strategic advantage for organizations willing to differentiate themselves in an ever more competitive digital economy

We’re living in an increasingly digital economy, driven by technological advances and growing digital interactions and transactions. As people embrace this new world, they expect a smooth customer experience. This article explores the effort needed behind the scenes to encode information in the digital economy and meet users’ expectations.

To understand more, let’s first take a step back. Our physical economy consists of stakeholders across three main categories: people, private companies and public entities. They are connected by business transactions, whether these are purchasing a product like buying a house, or a phone, or consuming a service like getting lunch delivered, having a medical appointment. In fact, whenever products or services are consumed, these transactions consist in a flow of value between stakeholders. It’s this that connects us all in the physical economy and forms the foundations of a functioning ecosystem.

But what about the digital economy? Stakeholders are not replaced, but represented by information systems. People use web browsers or apps, companies sell goods in their online shops and public entities such as schools or tax departments are increasingly embracing e-portals. Business transactions in the digital economy consist of exchanges of information, i.e., data flows, which represent a transfer of value between stakeholders.

What is the main challenge of business interactions in the digital world?

This is where the parallels end, however.

1. Interfaces

In the physical economy, humans interact and process information with the same standard set of biological interfaces they’ve been using for millennia: the mouth, ears, eyes, nose, hands and feet. Information systems in the digital economy, on the other hand, don’t have a standardized set of interfaces. There is a wide range of heterogeneous communication endpoints and protocols (e.g. SMTP, HTTP, RFC).

2. Communication channels

The way humans and information systems use these interfaces to interact is also different. Humans use voice and physical behavior as communication channels through their biological interfaces, while information systems use data envelopes (e.g. XML, JSON, CSV) through their communication endpoints. And again, for information systems, they are not natively compatible between each other’s.

3. Semantic structures

And what about the data itself? Humans have developed several semantic structures to communicate: languages. And just as humans need to “translate” between languages, information systems also need help to “understand” each other. But unlike humans, information systems do not have a finite list of normalized semantic structures. Even worse, all of them have structured their data according to their specific needs, leading to millions of semantic structures.

After all, the absence of standardized interfaces, protocols, data envelopes, structures and formats, makes any business transaction (i.e. exchange of information) between two stakeholders on different systems complicated and costly. Fortunately, the exploding number and complexity of data exchanges have pushed companies to converge toward common endpoints. API – standing for Application Programming Interface – has become over the years the most used, and de facto the standard interface on the market for information systems to communicate. And through APIs, further standardization is on the way: 65% of APIs use the JSON format and we expect this trend to continue.

What are the business benefits of using APIs?

APIs play a key role in both augmenting traditional business models and enabling completely new, fully digital ones through five main value vectors:

  • Business services integration

    Business services integration materialize a recurring business transaction between stakeholders to provide more integrated services to their ecosystem of partners, providers and customers. An example of this in action is travel apps; they plan your route based on personal preferences, share updates on disruption and alternatives, and offer direct ticket purchasing for all operators in your journey. Previously, these steps had to be carried out separately.

  • Omnichannel engagement and mobility

    Customers increasingly expect the same service with the same features across any channel, both physical and digital. If you want to make a credit transfer, you can call the bank, use the app, use e-banking or pop into your local branch. In the past, new systems were built on top of old ones separately for each channel. The result was varying experiences and features. In the best case, this leads to inconsistencies, in the worst to incompatibilities.  Back-end systems need to be synchronized to ensure all channels reflect the same status. Investing in unique API, and adapting the back-end systems, banks could ensure the same features, behavior and functions for all channels. The API can take over from the different back-ends without the end-user even noticing.

  • Customer journey consistency

    Businesses seek to understand the customer journey in order to improve processes, products and services – and deliver an exceptional customer experience. Consistency is an important aspect of this. Let’s take the example of “click and collect” groceries. You order online from your desktop during your lunchbreak, but realize on your way home you forgot something, so you modify the order in the mobile app. You collect the order by presenting your QR code at the store and pay at the terminal in store. To create this smooth, natural process for the consumer, the retailer has to overcome complex challenges behind the scenes, applying APIs at each interface to make it possible.

  • Open innovation

    In our interconnected world, boundaries between organizations, stakeholders and the environment have become more fluid. Exposing APIs is a great way to foster innovation outside the organization by involving stakeholders such as other businesses, customers, universities, scientists or public institutions. As an example, the various Covid dashboards that popped up during the pandemic were built on APIs, which connected information seamlessly from different sources.

  • Digitally-connected physical world

    APIs play an important role in connecting consumers, devices and services through the Internet of Things (IoT). One example is the various e-scooters and bicycles available to rent via an app. Thanks to sensors and GDP devices, you can check the availability and location of a unit and book it in near real-time. The APIs share the request and response between the server and the user’s app.

How do businesses harness the full potential of APIs?

1. Defining and executing an APIfication strategy

The first challenge is defining and executing an APIfication strategy. As many systems work together, businesses should prioritize and identify the best return on investment to APIfy their systems.

2. Managing at scale the increasing number of APIs everywhere, inside and outside the enterprise

Next, businesses need to manage at scale the increasing number of APIs everywhere, both inside and outside the enterprise. As the number of APIs grows exponentially, and multiple versions co-exist, it can be difficult to keep an overview, or make changes safely without unintended consequences.

3. Defining an API segmentation strategy and architecture

The third challenge is how to structure and segment the API catalog and corresponding architecture. A good starting point is to distinguish between the three main categories and consider the specific features and requirements of each:

  • Internal APIs – non-production environments for internal stakeholders, without exposure to the internet
    Considerations: Restricted access, detailed access management, low to medium utilization and workload
  • Ecosystem APIs – for external but trusted stakeholders (partners, providers, clients).
    Considerations: Restricted access, consumption and performance monitoring, potential API monetization and need for strong protection against cyber attacks
  • Public APIs – for non-identified external stakeholders (public or private) 
    Considerations: Strong security, resilient to huge work load and utilization.

4. Defining an API organization and governance

A final challenge is how to define the API organization and governance. If not managed properly, you end up with an anarchic mess. There needs to be a common vision and strategy, guiding principles, good documentation, harmonized technology and data formats, and a strong development community and communication culture.  To achieve this, organizations should define the main stakeholders and their roles:

In an ideal setup, an API core team is in place to connect services owners, which produce APIs, to consumers, who use APIs and flag issues. This core team is responsible for ensuring the success of the API strategy by managing all aspects of the API lifecycle.

  • Spotlight on APIs – beyond traditional business models

    A main reason businesses embrace APIs is because they augment traditional business models in the digital world. One example is food delivery. Thanks to APIs, bricks-and-mortar restaurants have evolved into sophisticated suppliers of food – often around the clock and at any location. But APIs have also enabled completely new business models that are 100% digital, such as comparison portals, which bring together information about competitors’ products on one site.

What’s next?

Like any technology, APIs are constantly evolving and new challenges are already emerging. Companies are increasingly taking advantage of different forms of hosting, with hybrid and multi-cloud solutions adding a whole new layer of complexity to APIs as data is scattered across platforms and hosts. Also, APIs only normalize the interfaces between systems, i.e., they facilitate the exchange of information between interfaces. But what if that information is coded differently? Data mediation in the sense of translation will be essential to ensure that systems not only communicate, but also understand each other.

Finally, APIs have the potential for monetization – but target users are not always aware of the possibilities. A next step could be an API marketplace to showcase and centralize APIs as digital services for sale or subscription, including their documentation, purpose and utilization.


APIs are a foundational component of the digital economy. Organizations should invest in their APIfication strategy to keep pace with change and propose more connected, integrated and omnichannel services to their clients.

About this article

Wolter Jalink

Partner, Head of Technology Transformation | EY Switzerland

Experienced Senior Technology Strategy Advisor, supporting organizations in technology enabled transformation.

Julian Segantini

Director, Technology Strategy Lead | EY Switzerland

Seasoned IT Strategy and Transformation specialist, leveraging technology to create tangible business value for our clients.