13 min read

What Is an API? From Basics to Use Cases and Types

Application Programming Interface allows different apps to communicate with each other. Seamless data exchange, streamlined workflows, faster development – API makes all these things possible. In this article, we explain everything you need to know about API and illustrate how it works with real-life use cases in finance and healthcare.
Written by
Samuel Schmid
Published on
February 5, 2024
Read time
13 min read

Have you ever wondered how different apps and programs interact with each other, transmitting information lighting-fast? It’s all thanks to the Application Programming Interface (API), a set of rules and protocols that enable different applications to communicate with each other.

Think of APIs as the behind-the-scenes coordinators, just like waiters in a restaurant. Similar to how waiters take orders from customers and pass them to the kitchen, APIs act as messengers between different parts of software. When one part needs something done, the API makes sure the request gets to the right place. Once the task is completed, the API ensures that the results are sent back promptly, like a waiter delivering a dish from the kitchen to your table.

The concept of APIs is closely related to system integration, a topic we have previously discussed. Check out our article: “What Is System Integration? Types, Use Cases, Approaches, and Common Challenges” for more information.

Now, let’s look at real-life examples of APs.

Illustrating APIs through examples

Have you ever made an online purchase?  When you see the “Pay with PayPal” option while checking out, that’s an API in action. It is responsible for a smooth connection and data transfer between the website and PayPal’s payment services.

Modeso is a custom software development company, and like any company in this industry, working with APIs is our daily routine. We develop custom APIs to make it possible for an application we’re building to integrate with other systems and integrate different data sources and third-party apps with the software we’re building through APIs.

For instance, as a software development partner of TWINT, a company that owns Switzerland’s most popular payment app, we’ve developed four projects that heavily rely on API integration.

One of these projects is Digital Voucher which lets users purchase vouchers from merchants directly through the TWINT app. To enable this functionality, we had to integrate TWINT’s payment capabilities with various merchants, so they could showcase their products (digital vouchers) in the TWINT’s app. We used APIs to do that. Our team implemented an integration layer that provides a standardized interface to streamline the interfaces of different merchants. This connection ensures a straightforward and secure workflow for users purchasing vouchers and provides a user-friendly admin panel for merchants enabling them to manage configurations and monitor application performance.

Though APIs are everywhere in today’s software world, it didn’t start that way. Let’s explore where APIs came from and how they’ve changed over time.

Short history of APIs

It might sound surprising, but APIs were first mentioned in scientific literature back in 1968 in the article Data Structures and Techniques for Remote Computer Graphics. The paper discusses a set of service routines and subroutines that allow users to interact with a hierarchically organized data structure in a central computer for remote computer graphics systems. Though the description provided in that context differed from the APIs we are familiar with today, the functionalities highlighted align with the fundamental concepts that later evolved into what we now call an API.

Web APIs as we know them today only emerged with the introduction of the Salesforce API on February 7th, 2000. In the same year, on November 20th, eBay introduced eBay APIs, which were initially available only to a selected group of licensed partners and developers interested in building applications, tools, or integrations that interacted with the eBay platform. Then, on July 16th, 2002, Amazon Web Services entered the scene, letting users incorporate Amazon features into their websites.

Today, an API is not a privilege of tech giants, but a powerful tool promoting connectivity, innovation, and efficiency across a wide range of applications and platforms. Let’s see why it’s so indispensable.

Benefits you get with API integrations

While the advantages of using APIs are countless, one stands out prominently ‒ APIs enable users to access the required data and services from diverse independent data sources and applications. It means that any software product can get an array of capabilities without the need to develop this functionality from scratch. With that said, let’s name some other benefits APIs allow you to gain.

Seamless communication among apps, databases, and cloud services

APIs let different software systems communicate and work together, allowing for effortless data exchange, and streamlined and integrated workflows across various platforms. Interconnected systems are crucial in today’s digital environment where various applications and platforms are needed for businesses to operate efficiently.

Unified access to information

Using APIs, you can create a platform that consolidates information from various sources in a single place. This way, you get a single access point, eliminating the need to switch between tabs.

Accelerated development process

By connecting with a third-party system through an API, developers can skip the time-consuming process of creating features from scratch. Apart from saving valuable time and resources, an API opens the door to a vast array of functionalities available through existing services.

Business growth opportunities

Well-designed APIs open up new business opportunities. By creating your own API, you can provide access to your data or services to suppliers, clients, and partners enabling you to expand market reach and attract a wider customer base.

Better scalability

APIs contribute to the scalability of applications. They are reusable, meaning you can create multiple applications and technology offerings on top of your existing API in a fast and cost-effective manner.

These are some potential benefits you might get when using an API while developing your software. However, if you have certain doubts about whether APIs are indeed valuable, let’s imagine for a moment the world without APIs.

What would the world look like without APIs?

Without APIs, the digital landscape we know today would be vastly different. No APIs means no social media updates, no online shopping with a single click, and no instant access to your favorite shows on Netflix or YouTube.

Interactions between different applications would be cumbersome and limited, hindering the seamless flow of information. Integration between diverse platforms would be challenging, leading to isolated and siloed data. This lack of connectivity would impede innovation, making it difficult for developers to create versatile and interconnected solutions.

The absence of APIs would mean losing the convenience we take for granted in our daily digital interactions.

APIs have indeed helped transform multiple industries. Let’s see what we mean exactly by using our case studies.

The role of APIs in digital transformation across industries

To modernize business operations and enhance customer experiences, organizations across different industries are moving toward digital transformation. Whether it’s automating workflows, integrating third-party services, or enabling data exchange between disparate systems, digital transformation would be challenging without APIs.

Here are real-world examples of how APIs can improve processes across different industries.

Modernizing financial systems

Mobile banking apps, payment processing systems, insurance tools ‒ all these solutions rely on financial interactions, with APIs serving as the essential foundation. In fintech, APIs ensure seamless data exchange between financial services, secure transactions, and real-time access to banking information. As an example, let’s look at one of our projects where we helped our client modernize their financial system.

Albin Kistler is a prominent wealth management firm in Switzerland with more than 8 billion assets under management. The company uses a proprietary algorithm for investment analysis that meticulously evaluates a company’s financial health. This engine integrates both qualitative and quantitative inputs, resulting in a comprehensive assessment process.

To access historical financial data spanning over two decades, the algorithm relied on an outdated research database, the first version of which was developed about 15 years ago. The second iteration exhibited sluggish performance and proved difficult to extend. To address the shortcomings and transform the database into a modern web platform, Albin Kistler turned to Modeso.

Not only did we update the technology stack, but we also re-implemented the algorithm to enhance its performance and usability. This was achieved by integrating the application with various systems through APIs:

  • To obtain financial data like stock quotes, bond prices, and currency exchange rates, we used SIX apiD, a leading global financial information service. Our integration involved selecting and implementing features in the SIX apiD interface, optimizing data retrieval, and ensuring compliance with licensing agreements.
  • For details on customer ownership, stock, and bond values, we linked the application to Expersoft’s PM1 platform via direct database export. We also implemented a data validation mechanism to meet our application’s quality standards.
  • By integrating with Albin Kistler’s Active Directory, we achieved seamless authentication and user information import, eliminating the need for manual data entry.

If you would like to learn more about this project, consider reading the full case study.

Streamlining healthcare workflows

In healthcare, APIs can ensure a secure transfer of patient data between different software systems and remote monitoring devices. This way, healthcare professionals can get access to comprehensive patient data, which leads to more informed decision-making.

Another use case for API integrations in healthcare involves optimizing medical equipment and supplies manufacturing workflows, as evidenced in our recent project.

We have partnered with Dental Axess, a company specializing in CAD/CAM and dental imaging solutions for dental institutions. As a distributor of dental products, including clear aligners, Dental Axess wanted to build a cloud-based platform (Xflow) that would allow dental clinics and labs to seamlessly manage the entire clear aligner manufacturing process – from scan to design and fabrication.

Since our main goal was to create a platform that consolidates patient data, 3D scans, and other essential information, and automates workflows between practitioners, designers, and manufacturers, we implemented the following key integrations:

  • Third-party 3D scanners (3Shape and Medit) to upload scans into the system.
  • Industry-leading third-party design software to allow orthodontists to create treatment plans directly within Xflow.
  • Custom integrations with manufacturer hardware, patient management systems, and other solutions to streamline the process of 3D model printing and internal workflows related to clear aligner manufacturing. We built a public API to enable custom integrations.

Read the full case study to learn more about this project.

Automating operational processes in the manufacturing industry

By leveraging APIs, manufacturing companies can create a more connected, responsive, and efficient production environment. To begin with, APIs facilitate seamless communication between various elements of the supply chain, such as suppliers, manufacturers, and distributors. Besides, they help automate the manufacturing process by connecting machinery, sensors, and control systems, while improving the overall quality of products. Our recent project can serve as an illustration.

A startup looking to address the prevalent inefficiencies in manual quality management processes faced by manufacturing companies across diverse industries decided to build 1LIMS, a comprehensive Laboratory Information Management System. They came to Modeso to help bring their idea to life. From market research to prototyping and MVP development, we worked on this project from start to finish, while adjusting our development roadmap based on user feedback.

A vital element in product development was the integration with widely used ERP systems such as SAP to automate the configuration of master data – the key functionality within 1LIMS. This integration enables a smooth workflow. For instance, when a company initiates an order for a new raw material in SAP, it automatically generates a quality control order in 1LIMS to inspect the incoming material upon arrival, upholding rigorous quality standards.

Other than that, we developed a public API for 1LIMS to allow their clients to integrate their service labs and laboratory devices such as High-Pressure Liquid Chromatography (HPLC) and pH meters. These integrations allow 1LIMS customers to eliminate manual data transfer, creating a seamless flow.

By connecting various systems within one platform, we help users achieve data traceability and speed up their operations, contributing to enhanced quality management and effortless regulatory compliance.

Read the full case study to learn more about this project.

Now that we’ve discussed the use of APIs in different industries, let’s delve into the key API types and protocols.

API types

Based on their availability and release policies, APIs are divided into private, partner, and public. Let’s see how they differ.

Private APIs

Private APIs are developed to enhance organizational solutions and services. They are primarily used by in-house developers or contracted parties to integrate various IT systems within a company, develop new systems, or create customer-facing applications. These APIs have limited accessibility, and are available only to individuals directly working with the company, even if the applications they support are publicly accessible.

Partner APIs

Partner APIs are designed to foster collaboration and integration between an organization and its trusted partners. Typically, partner APIs are shared with specific external organizations or developers who have established a partnership with the API provider. Such APIs are often used in joint ventures, business collaborations, or when integrating services between companies with a mutually beneficial relationship.

Public APIs

Public APIs are accessible to external developers and the general public, encouraging widespread adoption and innovation. They offer a standardized way for third-party developers to access specific functionalities or data from a company’s systems. An example of public API is Google Maps API, which allows developers to embed maps, customize map appearances, and access various location-based services, such as geocoding and routing.

Most popular API protocols

An API protocol is a set of rules and conventions that dictate how software components should interact with each other over a network. It defines the standards for communication, data exchange, and the methods by which different systems can request and respond to each other’s actions. Protocols make sure that communication between software components is consistent, secure, and efficient. Here are the most popular API protocols.


REST API follows the design principles of the REST, or representational state transfer architectural style. Because of its flexibility and freedom for developers, REST is considered to be one of the most popular APIs for connecting apps, most commonly used in a microservices architecture. These interfaces are used in IoT systems, and the majority of web and mobile applications.

In general, REST APIs can be developed in various languages and support different data formats. REST API’s core principles include statelessness, uniform interface, client-server decoupling, cacheability, and more.


SOAP, or Simple Object Access Protocol, is known for its strong security features, making it a preferred choice in scenarios where data integrity, confidentiality, and comprehensive security measures are crucial. Its core characteristics include XML-based messaging, protocol independence, strong typing, and more.

SOAP APIs are frequently used to build financial apps, enterprise-level web systems, government and healthcare services, as well as for integrating with legacy systems.


GraphQL (Graph Query Language) is a query language and runtime for APIs that was developed by Facebook. GraphQL provides a more efficient, powerful, and flexible alternative to traditional REST APIs. Apart from declarative data fetching, GraphQL is characterized by a strong typing system, real-time updates through subscriptions, batched requests, and more.

GraphQL is versatile. It can be employed in e-commerce applications for handling complex product catalogs, CMS platforms to enable dynamic content retrieval, and real-time applications, such as chats and collaborative tools, where instant updates are crucial.

What should API documentation for developers include?

API documentation is a navigational guide that includes instructions on how to effectively use and integrate with an API. Comprehensive and well-structured documentation is key to fostering a smooth integration process, reducing development time, and enhancing the overall developer experience. Here’s a breakdown of what good API documentation should include:

Quick start-up guide

Outlines the essential steps required to get started, including key concepts, basic functionalities, and any prerequisites.

Authentication information

Clear instructions on how to authenticate with the API.

Error handling guidelines

Instructions to quickly identify and resolve issues during integration.

Request and response examples

Detailed examples of both request and response structures for each API call.

API endpoints

A list of all API endpoints, including their functionalities and the data they handle.

Code samples in common programming languages

Examples of code samples for integrating the API using popular programming languages such as Python, Java, JavaScript, PHP, and others.

Need to build an API or integrate with third-party systems? Let’s talk

We hope this article has clarified what an API is and how important it is in modern software development.

Our developers at Modeso specialize in implementing custom API integrations and building private, public, or partner APIs,  tailored to your specific needs. If you need to implement APIs, contact our team to discuss your project.

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