The news that the UK Government is considering introducing legislation that force the Financial Services industry to develop common, publicly available Application Programming Interfaces (API’s) shouldn’t come as a surprise. Initiatives like Level 39, Finance Innovate and Fintech50 have helped position the UK as a Fintech powerhouse and the new UK Government has made it clear that it wants the UK to be at the forefront of Financial Services innovation and enabling more innovation around bank data is one way to ensure that that happens.
Ironically many organisations still see API’s an interesting curiosity but a curiosity nevertheless and the creation and development of APIs are often pushed down to the bottom of the business agenda but in today’s increasingly digital world APIs are the equivalent of our own cardiovascular system – one that breaks down information silos by ensuring that information can be transported to wherever the it’s needed in the most efficient manner possible.
Implemented incorrectly and without the right controls though APIs can also be the equivalent of leaving your front door open – something that’s not been lost on the CIA whose Venture Capital arm In-Q-Tel, seeing the value in ‘joining the dot’s in the Internet of Everything era, in 2013 invested in the popular API firm Apigee.
The debate over whether or not the Government will legislate the Financial Services community to adopt or create open, common APIs can be seen as a double edged sword. On the one hand it could help Financial Services organisations with the right attitude and approach innovate faster and let them build out and monetise new Developer and Entrepreneur Ecosystems who could use access to the larger banks broad base Rails App Store and its underlying infrastructure and regulatory compliant frameworks to bolster their own products and services.
On the other hand though as we’ve seen with the Media and Technology industries it could also give rise to another bigger wave of agile and hungry Fintech competitors and let them ratchet up their own competitive offerings. This time though they’ll be armed with not only glorious design but also the data needed to make their products sticky and valuable putting the banks under even more pressure to compete and innovate.
A Government legislated API strategy will be good news for consumers, Fintechs and the Financial Services industry as a whole and. It will stimulate a new innovation arms race and offer organisations the ability to grow outside of their own organisations walls but similarly if organisations don’t invest the time or effort to create robust, valuable customer centric products and strategies then it could cut through their business like a wrecking ball.