Irakli Nadareishvili (@inadarei), Dave Goldberg (@davidgoldberg) and I were having an interesting conversation on the Twitterz, after I posted "As We Recover The Banking Industry Seems To Be Warming Up To APIs", yesterday--on a topic I think is worth repeating regularly, to generate discussion within any business sector.
I think that all three of us are optimistic about what APIs can do in an industry like banking, and because of our experience, we are very realistic about what is possible in the end--realizing not every API will be good by default.
I'll just let you follow along with our conversation, then I'll explore a little more:
As We Recover The Banking Industry Seems To Be Warming Up To APIs http://t.co/JYuOs3bmht via @apievangelist— Kin Lane (@kinlane) August 3, 2014
@kinlane it's insane how far behind major industries are: healthcare, banking, airlines. It's 2014 and HL7 is the best we can do? Really?— Irakli Nadareishvili (@inadarei) August 3, 2014
@inadarei they are slow moving beasts, and some will be eaten away at, but many will be able to continue to exists as legacy beasts. #sad— Kin Lane (@kinlane) August 3, 2014
@kinlane and the reason why we LOVE @twilio: they hid the mess of telecom behind a nice API. WE need @twilio for each such legacy beast :)— Irakli Nadareishvili (@inadarei) August 3, 2014
@inadarei amen. hide the legacy. be progressive. evolve and move forward. I should do a white paper, using @twilio as blueprint to guide— Kin Lane (@kinlane) August 3, 2014
@kinlane @inadarei banking and healthcare have steep barriers to entry. Won't see much change unless threatened or major $$$ to be made.— Dave Goldberg (@davidgoldberg) August 3, 2014
@kinlane yeap AND: make a lot of money while you are at it. @twilio proved that hiding legacy behind a nice API can be great business #cool— Irakli Nadareishvili (@inadarei) August 3, 2014
@davidgoldberg they'll never change themselves, but we can twilio the heck out of those industries There "twilio" is a verb now :) @kinlane— Irakli Nadareishvili (@inadarei) August 3, 2014
@inadarei @kinlane difference with Twilio is that telecoms were already selling access to messaging. We see the same thing with payments.— Dave Goldberg (@davidgoldberg) August 3, 2014
@inadarei @kinlane so individual parts will get picked off. But main trunk is more challenging.— Dave Goldberg (@davidgoldberg) August 3, 2014
@davidgoldberg @inadarei I feel like each @twilio in industry w/ giants is like drilling hole and inserting dynamite pic.twitter.com/Pngyf4pt7I— Kin Lane (@kinlane) August 3, 2014
@davidgoldberg @inadarei and eventually... pic.twitter.com/H2u8Y2078v— Kin Lane (@kinlane) August 3, 2014
What would a Twilio look like for the banking industry? Probably similar to The Open Bank Project or Plaid, and focusing on rebooting, and simplifying just a single slice of the insanely complex banking system. I'm not saying that these two startups are the next Twilio of banking, but I do see them as two potential dynamite holes being drilled into the bedrock of a very entrenched, highly regulated industry, and powerful industry.
I don't see APIs being the silver bullet to the banking industry, or any other industry for that matter. Slow change will happen through the solid execution of an API focused business strategy by one or more of the existing banking powerhouses, at the same time it will also take a wave of API driven banking startups, who hopefully emulate much of Twilio's game plan, to slowly to blast away at the bedrock core of the banking industry.
Another thing to pay attention to, is when the large banks do understand how APIs are becoming the pipes for this new digital economy, they will begin to wield their power and influence, just as other 1000lb gorillas do in business sectors like education, healthcare, and other critical areas of our economy. APIs don't just purify the distribution of legacy power like a rocky mountain stream does to water, it will take the development of some pretty sophisticated API facades to mask legacy complexity, every step of the way.
In a next post, I'll explore what this top down, and bottom up approach looks like, by examining the progress we have all made with open data, and APIs in the federal government.
P.S. Sorry Irakli, I just couldn't use Twilio the "HECK" out of them. I have an edgy image to uphold, but remember everyone Irakli is the first person to use Twilio as a verb!