Thread by @amiasmg

1/ What about government? #OpenBanking #CBDC? Final of 7 essays w/ @NateSoffio is here qedvc.com/APIsPart7
@QEDInvestors @whartonfintech today, the evolving API-mediated marketplace, look forward to no-code/low-code movement and SCOTUS giving legal certainty.

2/ APIs are everywhere, every SaaS company must turn into an API-first company to survive. For the last 6 weeks we’ve laid out a guide for the next generation of SaaS built on the foundations of API-first development.

3/ What does it mean for the next generation of fintechs to be powered by API-first companies?

First it means that the barriers to entry are going to go down for consumer facing and small business companies.

4/ Second it means that the divide between financial services and other products will erode.
Third, the sources of value in API-first companies will subdivide and product- and strategic- distinctions need to be even sharper.

5/ When the functions are clearly defined and atomic, each layer needs to focus on what it *really is*.

At the top of the stack are customer acquisition and customer experience companies – defined by marketing arbitrage and a war for feature parity.

6/ Actual financial institutions – regulated entities that produce financial services and products will have to excel at that -- bank charters, writing insurance policies, managing investment accounts, transmitting payments, underwriting loans.

7/ The logical endpoint for the BaaS-enabled financial services ecosystem is to create a natural marketplace against the backdrop of commoditizing services.

8/ Embedded financial products allows the company who already has *acquired a customer* to monetize that relationship in a new way – plus banks get distribution, and consumer gets convenience.

9/ Every point of lock-in is also a way to lose a potential customer, so customer choice will naturally creep back in.

10/ Banks will have narrower risk appetites than the consumer acquisition-led companies that sit on top of them, so those companies will need multiple banks. And we already know that fintech-sponsor banks want to support multiple, competing fintechs.

11/ The BaaS-ecosystem will be a marketplace mediated by API-quality, functional breadth, and technical reliability.

12/ The companies and financial institutions that will survive will either do so by being smart bundlers who write to other fintech APIs to drive incredible experiences, or those who thrive behind the curtain by having indispensable APIs to which companies write.

13/ But #Nocode and #LowCode is right around the corner. Does this supplant API-first companies altogether. Too early to tell, but we think that no-code/low-code is an accelerant for these trends.

14/ No-code/ low-code software allows non-engineers to build databases, workflows, business logic, and whole applications through pseudo-code and UX-based interactions.

15/ So these implementation tools, if they sit on top of sufficiently broad API-functions, could allow banks to get back into the feature-parity competition with the best of consumer and SMB focused fintechs.

16/ No/Low-Code allows more teams to attack the user-experience, the workflow SaaS, the automation horizon. But they will need to be able to call specific functions, so only those providers and banks with APIs worth writing to will survive.

17/ The fact that an API-first company sells to employees of a company who are builders is much more important than the fact that they sell to employees who are developers.

18/ Last week saw an important triumph for the API-first future, in #GooglevOracle where the Supreme Court recognized that the logic and language of an API is inherently reusable, and legally protected under the fair use doctrine

19/ Most importantly, Justice #Breyer found that reimplementing an API to build something new is “transformative” – a technical legal term – but also a great statement for the future of an API-first fintech ecosystem.

Thanks @fintechjunkie @burtomd0 @LaurenConnolley @ocrolus @ctdean @jimbru @ocrolus @treasuryprime @USSupremeCourt @charles_duan