Application Programming Interfaces called APIS establish connection between computers or computer programmes. They are software interface since they are little pieces of code at the endpoint of a software allowing a connect and communication. In short, we can say they serve as a bridge between different softwares and devices. Here, the term endpoint refers to a simple URL through which you can use an API. API is essentially software intermediary that allows two applications to talk to each other.

As we know, there is a need to share data, and networking facilities such sharing. The system are distributed. There is sharing of resources or even softwares across different applications.

While doing so, there should be no compromise on privacy. It is for this reason, there is a layer of abstraction. It makes these universally understandable and easy to use. High level programming languages have APIs which provide abstraction like Collections in Java and STL in C++. A developer need not implement basic components like Lists, Linked Lists, HashMaps etc. from scratch. Another example is sorting function in JavaScript.

Privacy is ensured by integrating an authentication mechanism, say a secret key or token. API gateways intercept incoming requests and manage authentication.

APIs have revolutionised banking and finance.They could be used in healthcare too.

Either a fee is charged for API use or they are offered free.

In India, we have IndiaStack, a set of public APIs. Aadhar is an illustration of this. Many third party service providers can connect to Aadhar database and do the authentication. Its eSign API allows electronic signing. Its UPI API together with virtual payment ID or address enables bank account holders to transfer money digitally using the smart phones. Even third party service providers can use these APIs, say Google Pay and Phone Pe. API allows to do KYC of an individual in his absence in a trustworthy manner. A customer can be served virtually.

Old banks with legacy systems tie up with fintech companies or neo-banks and using APIs can make available a variety of offerings. Mostly neo-banks do not have banking license, but tie up with a licensed bank.