REST API
A REST API (Representational State Transfer) is an architectural style for designing networked applications that use HTTP requests to access and manipulate data. REST APIs operate on resources identified by URLs, using standard HTTP methods like GET, POST, PUT, and DELETE. They are stateless, meaning each request contains all the information needed to process it, and responses are typically formatted in JSON or XML. REST APIs are the most common way to expose financial data and services over the internet.
In Financial Services
Real-World Example
A fintech startup builds a personal finance management app using REST APIs from multiple financial institutions via Open Banking. The app uses the bank's Account Information API (GET /accounts, GET /accounts/{id}/transactions) to retrieve transaction data, a payment initiation API (POST /payments) to schedule payments, and a market data API (GET /prices?symbols=AAPL,MSFT) to pull stock prices. Each API call returns JSON data that the app aggregates into a unified dashboard showing the user's financial position across all accounts and investments.
Why It Matters for Finance
REST APIs are the foundation of modern financial data integration. For finance professionals, understanding REST APIs is essential because they enable connectivity between financial systems, support Open Banking initiatives, and provide access to market data. REST APIs are the most widely adopted integration pattern in financial services, and virtually every financial SaaS platform exposes a REST API.
Related Terms
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Frequently Asked Questions
What is a REST API in financial services?
A REST API is an architectural style for exposing financial data and services over HTTP. Banks use REST APIs for Open Banking, market data providers use them for price feeds, and payment processors use them for transaction processing.
How do financial institutions use REST APIs for data integration?
Financial institutions use REST APIs to connect systems, expose account data via Open Banking, access market data from providers like Alpha Vantage, and integrate with payment processors like Stripe.
What is the difference between REST API and MCP for financial AI?
REST APIs expose data and operations over HTTP with fixed endpoints, while MCP (Model Context Protocol) provides a standardized protocol for AI models to discover and interact with tools dynamically.