API is a tool that allows different software applications to communicate with each other and exchange information.
🔧 Simple Example:
Imagine you're at a restaurant, and you're looking at the menu. The menu is your application.
The waiter is the API.
The chef and kitchen are the other system.
You order a dish (for example, a pizza) through the waiter (API), and the waiter takes your order to the kitchen and brings the finished dish to you.
🏦 How Does an API Work in Banking?
Banks use APIs to connect their systems to external applications or services (like mobile apps, payment systems, or fintech services).
Examples:
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You see your bank balance in a mobile app — this works via an API.
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You check your credit report via another service — the API connects the bank and the service.
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When you make a payment at an online store, the bank uses an API to process the transaction.
🔐 API Security
APIs need to be secure because they handle sensitive and confidential information. Therefore, banks and companies use:
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Tokens or API keys for authentication.
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Encryption to protect data.
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Restricting access to only necessary services.
✅ Advantages of APIs
| Advantages | Explanation |
|---|---|
| ⏱️ Speed and Automation | Data is transferred automatically, without human involvement. |
| 🔗 System Integration | Different systems and services can work together. |
| 📱 Ease of Creating New Services | APIs make it easier to create new apps and platforms. |
| 🤝 Open Banking Systems | APIs allow integration of banking services with other apps. |
🧠 In Summary:
API is the bridge between applications, allowing them to exchange data and work together.