The opinions expressed here are those of the authors. They do not necessarily reflect the views or positions of UK Finance or its members.

The essential function of APIs is to provide a standard data-sharing interface across different programs and applications. As new updates and upgrades are published, APIs can ensure that they communicate smoothly with existing software.

This is especially important for firms in the accountancy and banking sectors, because they have complex legacy systems and processes which contain information that is vital to their business.

We have found from our own APIs that automating and digitising key audit activities, such as confirmations, is becoming strategically important to our clients. This is largely owing to the growing sophistication of financial fraud, the rising cost of compliance and the need for audit and bank teams to work more efficiently to save time and focus on higher priority work.

Delivering productivity and precision

APIs enable firms to automate low-value, staff-intensive manual tasks so their employees can be more productive – and enjoy greater job satisfaction. By eliminating manual data entry and reducing the potential for human error, API integration contributes to improved data quality and enhanced reliability.

And by supporting connections between diverse applications and devices – delivering data like account balances – APIs serve to enhance cooperation and collaboration, both internally and externally. Using real-time data, firms can make faster and better decisions, respond more rapidly to other parties such as auditors, and enjoy more efficient processes across their organisations.

Making processes more sustainable and secure

APIs enable firms to create financial solutions that accelerate the transition to a low-carbon future, playing a positive role in the environment. By reusing assets internally and integrating new services like event-driven APIs within their IT ecosystem, firms can reduce their demand for processing power. And with this greater efficiency comes lower economic and environmental cost.

APIs also help firms standardise their connections and data exchange with clients and third-party service providers, enabling them to exert tighter control over user access. Instead of relying on paper-based processes, which can be easily manipulated, APIs protect sensitive data by providing the connected systems with a secure route to interaction and communication.

Robust risk management is essential, however, given that insecure interfaces will make firms vulnerable to cybercrime. APIs must encrypt information across all networks, so that financial organisations can comply with regulatory standards and minimise the element of risk.

These rigorous standards apply to all aspects of our APIs at Confirmation’s platform.. Our customers can, for example, identify and validate responders across their own audit confirmation network and send confirmation requests to third parties such as law firms.

The future of APIs

As the pace of digital transformation accelerates, APIs are emerging as a key enabler. Their swift rate of growth is set to continue, with the global API management market expected to rise by around 25 per cent annually, reaching around USD15.8 billion by 2028.

And the reach of APIs is extending into other areas of innovation. We see many APIs in the sphere of open banking, where data-sharing provides an important resource for fintechs and large corporates alike. Numerous banks use APIs to offer secure access to real-time account information, transaction histories, and balance data.

Innovators are increasingly using APIs to connect to advanced applications, for example to AI models and data analytics tools. As AI technologies proliferate in finance, they will be increasingly hungry for accurate, reliable data, and APIs will be in ever greater demand. Our own experience of APIs tells us that they will be powering further levels of digital innovation throughout the financial world.