More and more companies across industries understand that APIs (Applications Programming Interfaces) are the way to re-align IT and business. They can increase agility while reducing time from ideation to innovation, and they can consistently deliver value in a digital world. This is even clearer in Fintech, where regulators now require financial institutions to provide open APIs to build an ecosystem and facilitate innovative services.
For the last 10 years, startups like Stripe have demonstrated that APIs are the next distribution channel for the programmable economy. Get this right and you too could be worth $22.5Bn in less than 10 years. If your interface is well designed, most of your customers will likely integrate your services autonomously in a totally self-service manner.
Regulations now force organizations to open APIs and investors support new generation banks and services built on top of them. In 2017, this new ecosystem already represented more than $100Bn in funds raised and almost $900Bn in valuation. Think about the neo-banks like Revolut, N26, and Starling Bank, who bring back value to the end customer.
The corporates’ legacy becomes their burden
Corporates dream of innovation and disruption and talk about it all the time. Truth is, young and agile startups are really in the best position of doing it. Marc Andreessen, one of the most iconic venture capital investors in Silicon Valley, said it in 2011: “Software is eating the World”.
Applied to the fintech world, this means that the best companies of tomorrow won’t be banks who do software, but software companies who do banking. Preceded by the idea of Chris Andreessen in 2008 “The end of Theory”, companies who understand software and data don’t need to be expert in their business to be good. They will learn so much more, so much faster, with so much more data and interaction that in the end, they will perform better than companies who have been specialists for a long time but who rely on their legacy.
If software is eating the world, APIs are eating software
In a distributed, connected world some companies understand that they don’t need to just adapt to APIs, they need to adopt them at the core. As Steven Willmott says: “If software is eating the world, APIs are eating software”.
Inspired by tech giants whose growth engine is their API strategy, some companies embrace new internal governance models, integration partnership strategies, and ultimately monetization models. Examples include BBVA, Capital One, Allianz, but also Airbus, Lufthansa, or Walmart.
Hopefully regulation forces laggards to move and open up APIs. It began with the banking industry in Europe when Open Banking UK and PSD2 regulations required integration capabilities between banks and third party providers, and has been followed by Australia, India, Singapore, Hong-Kong, Mexico, South Africa. Canada and the USA are next in line.
Other sectors are also impacted, like the healthcare industry. The FHIR and HR7 requirements help providers manage medical records. In logistics and supply chain, shared API standards are emerging to compete with Amazon.
Bringing the API mindset to corporates
APIs is a mindset, more so than a technology. Corporates must put them at the core of their strategy to enable new business models. Technically it requires new skills and roles like API product manager and APIOps. But the most important and first step is culture, with the intent of developing an API mindset.
The API mindset consists of organizational changes, strategy, and practice to align IT and business around APIs, while respecting a technical and business contract and enabling the ecosystem to play its part.
The API mindset means that every service should be externalizable, as Jeff Bezos puts it. As he shared to all Amazon employees in 2002, services should be designed from the ground up to be externalizable via APIs that developers will love.
The API mindset is about thinking API-first, building the API before the website or applications so that an organization can deliver the same service to all channels via a unique interface. This is how you think customer experience first, rather than product delivery.
The API mindset is about thinking beyond just API facades to define an interface contract that if respected will enable a company to refactor technical debt, and decouple the monolith into smaller services without losing customers. Because at the end of the day, respecting the interface contract is the technical and business promise of the API economy. Like Werner Vogels, CTO of Amazon Web Services, says: “code can change but APIs are forever”.
The API mindset is about thinking of API-as-a-product, designing and building APIs to be delivered and implemented internally to increase business breadth, and monetized in a business context.
The API mindset is about building a strong developer experience and creating a powerful API design. These are the mandatory skills to enable application builders to build great user experiences on top of your platform.
The API mindset is about continuous management of your APIs: to always make better decisions by knowing exactly what service is used, by who, where, and how many times, in order to monitor and drive your architecture and your business,
The API mindset is not about a technology or an architectural style or an IT project. It is about leveraging internal energies to make companies think bigger, deliver faster, and be more resilient. This is the only way for corporate giants from all industries, to resist disruption and adopt digital transformation internally and externally. Because agility is what drives businesses in the digital world of today.
About the author
This article was written by Mehdi Medjaoui, co-founder of the APIdays conference and co-organizer of the upcoming APIdays Singapore on April 23 and 24 at the Arts House (old parliament of Singapore). Mehdi is also founder of OAuth.io (acquired) and APIs expert for the EU Commission, Pr. at HEC MBA, and Chief API Economist.
Over 2 days of conference with international and local speakers from the API community, APIdays Singapore will explore this API mindset, the technical and business aspects of the API thinking and how it applies to the fintech-as-a-service ecosystem.