With Brexit, APIs Just Became Geopolitical

London holds the reputation of Fintech capital of the world, leading the forward-thinking EU as it seeks a more integrated European payments market. This is currently being built around the EU’s Revised Payments Services Directive (PSD2) that requires all banks operating in the EU to provide customers with access to account and transaction information, as well as payment initiation to third parties, via APIs. However, the UK’s position at the top of the list may be in jeopardy after the recent Brexit vote to leave the European Union and its single market, as discussed by Bryan Kirschner in a recent article for Recode.

Although there is no set date for the official withdrawal, and there will be a two-year notice period before it happens, the prospect of the UK exiting the single market has raised doubts over its continued reign as fintech leader in pursuing open banking. Fintech talent and investment could soon be leaving London, seeking alternative cities to focus their efforts, leaving banks to reassess their PSD2 response strategy.

Individual banks could opt for the minimum requirement and risk being exploited and overtaken by innovative third parties offering more engaging customer experiences built on bank data. Or, they could embrace the API economy as a driver of growth, creating value-added functionality to the APIs and charge a fee for it. It may also involve becoming active data aggregators as a foundation for a possible digital Platform business with an ecosystem of fintech companies built on enriching existing customer relationships.

Apply that idea to Brexit, and the first region to successfully navigate the digital platform journey may just create a critical mass of opportunities that could stimulate a new centre of gravity for fintech startups and funding. The question now is whether the UK will be able to act more swiftly in pursuit of this ideal, and whether EU cities will simply sit back and watch it happen, or try to create conditions for more open innovation to accelerate their digital journey.

Be sure to read the next API Strategy article: How and Why Etsy Adopted an API-First Architecture

Original Article

With Brexit, APIs just got geopolitical