Open Everything: The Role of Open APIs Across 6 Sectors Posted in Open Banking Chris Wood December 15, 2020 We live in an era where openness is perceived as a good thing. Views and opinions, good and bad, are thrown about on social media and in the press with such wild abandon that nothing seems private anymore. However, this openness is relatively atypical when we compare it to traditional industries. Financial services, utilities, logistics, travel, government — all these sectors rarely imbibe the spirit of openness that we are increasingly invested in. Efforts to open these sectors — to increase competition or offer more varied services to consumers — are sporadic and often forced by regulation. Despite this, the phrase “open everything” has started to be used by commentators on the API economy, mostly as an offshoot of the still-evolving open banking. Open everything might seem like hyperbola (and it probably is). Still, it points to a future where open APIs power industries and sectors to drive interoperability — allowing the digitization of processes that are currently human-oriented — and encourage competition and disruption at a colossal scale. As always, at the heart of these initiatives is giving real human beings what they want using the tools they choose to service those wants. Can we realistically expect a future where everything we need as human beings will be open to us in precisely the way we want it, powered by APIs? In this post, we look at what open everything might mean for the API economy across six sectors, with a view of whether these sectors embrace a spirit of openness — enabled by open APIs geared towards interoperability and market participation. Open Banking and Finance A discussion of open everything must start at the beginning, namely with open banking, which we’ve covered on the blog before. Through APIs, open banking is becoming widely available, and organizations interested in promoting greater competition and opportunity in financial services have coined the term open finance. The interest in open finance goes right up to the government level, with organizations like the Financial Conduct Authority in the UK having produced a Call For Input to garner the interest of the community in extending what open banking has done to date. How does open finance differ from open banking? Well, it doesn’t. The intention is to do more — more accounts, more banking functions — effectively increasing the footprint of what has already been achieved. Some open banking initiatives already do this, of course. For example, the Financial Data Exchange standards in the US market cover more account types than the payment account-focused standards in Europe (although access to the standards themselves is not open, more’s the pity). There are some exciting aspects to the open finance movement that can permeate all sectors moving towards openness. The most noteworthy is termed “smart data” in the UK consultation mentioned above. It refers to how consumers can readily permit or deny access to their data by third parties. This is the consent management part of open banking — common to most European standards — on steroids. Smart data, or user consent management, is at the heart of making open everything a reality. Without it, there will not be the requisite safeguards for consumers, which will foil adoption and leave people ill at ease with any solution using an “open” approach. If open finance does nothing else, maturing the concept of smart data so it can transcend different sectors will be enough. Open Government We’d all like or governments to be more open – well, for them to stop lying and tweeting at the very least. There’s also an argument that APIs could make governments too open. We should rue the day we can buy citizenship via a nefarious app, with calls to the POST /citizens endpoint in the background. However, from the open everything (and less suspicious) perspective, open government generally means one of two things: Providing open data through APIs that allow government functions to be served in different ways. For example, providing taxation information through an API would let citizens, not just specialist taxation software providers, to get to grips on programmatically calculating their tax return information for free. Providing open APIs that, with the right consent, allow the more privileged functions of government to be served. For example, registration of births and deaths. Currently, governments tend to focus on the former rather than the latter by making public data available in a myriad of different forms. Providing privileged functions tends to be entirely owned and served by the government themselves and requires a tight security model — so this is a lower priority. Where third parties are involved, the integration tends to be one-off and piecemeal. However, governments are starting to take the role of being an API provider seriously as it improves their means of serving their citizens, regardless of who the service provider is. For example: The Australian government recently standardized their API efforts on OpenAPI and are overtly addressing aspects of developer experience. The US government provides a catalog of open APIs. Similarly, the UK government offers an extensive list across a multitude of departments. The government of India — through the National eGovernance Division — has a national OpenAPI policy. Aggregators like Socrata Open API offer the means to transverse different API providers in countries like the USA where many implementations are at the federal level. The near-universal disruption of COVID–19 to people’s lives and the ability to access services remotely shows just how vital these open API initiatives at the government level are. Without them, the fundamental rights of citizens are frequently curtailed where in-person services are shut down. Open APIs are at the heart of ensuring ubiquitous access to services regardless of location. Open Healthcare Standardization of healthcare has long been a goal of many governments and jurisdictions to standardize interfaces and interoperability through protocols like HL7. In a similar way to ISO 20022 in financial services, such efforts tried to set out a standard operating model that promotes interoperability rather than allowing for the platform-model that open APIs tend to foster. Enterprise software providers like IBM provider HL7 implementations to support these efforts. Such efforts, and the relatively monolithic delivery of healthcare in many countries, means that open APIs in health are likely to grow more slowly. However, both regulatory pressure and the effect of the COVID–19 pandemic mean that open APIs are starting to appear. For example, the NHS in the UK now operates as an API Provider with a developer portal offering several “open data” APIs. Like the government APIs discussed above, these APIs are not geared towards the operation of the NHS — for example, no “open” APIs are available that allow Electronic Health Records (EHR) to be retrieved. These APIs obviously exist in some form, as hospitals and general practitioners have access to them online. However a common trust model that allows them to be shared to regulated third parties — at least not through the NHS developer portal — is more limited. Pockets of innovation in this space, like the e-Referrals API are beginning to emerge and the NHS are looking to standardize integration around the HL7 FHIR standards. It should also be noted that open healthcare is being increasingly commoditized. Solutions — based on APIs — can be bought off-the-shelf to provide APIs that leverage existing well-known formats. For example, Google now provides its Healthcare API solution that “…allows easy and standardized data exchange between healthcare applications and solutions built on Google Cloud”. This solution provides a wrapper around existing protocols like HL7. Such solutions can provide standards where none exists, which provides a route to open healthcare. Open AI Google the phrase “open AI,” and the top hit is a commercial organization with a yet-to-be-released API offering that we covered in a previous post. Regardless of what the name represents, APIs are at the heart of artificial intelligence, and we see a huge number of companies offering public APIs across a myriad of sectors. However, the commercial imperative is far stronger than any move towards standards. Each provider tailors their offering to their specific capabilities and charges a price for access. Many open-source tools are also available to assist in the development of AI solutions. For example, we’ve covered the use of TensorFlow on the blog, and how it can be used in machine learning, a specific branch of AI. Commercial efforts and open source aside, there are moves afoot to bring standardization to AI. For example, NIST issued a Request for Information in 2019 on AI Standards, and ISO is also actively developing a suite of standards. Whether these efforts realize standardization at the API level remains to be seen. Open Energy The energy sector is an area where openness through APIs could be of tremendous benefit. Having the means of powering a more dynamic supply and demand market – driven by data and powered by APIs – can reduce excess generation, meet many different use cases and allow new organizations to enter the market. Coupling that with the increasing need of consumers and businesses for a low carbon footprint and an open energy market would bring enormous value to participants in the market and our planet. In terms of country-level initiatives, the UK is leading the way with its efforts to foster an open energy sector. The Icebreaker One Open Energy initiative is attempting to transplant the model and standards created for Open Banking into energy, with use cases like enabling the retrofit of low carbon technologies in local authority buildings. While this approach has its challenges — the lack of a regulatory mandate for energy suppliers to implement standardized APIs, for one — using a tried and tested method that has increasing levels of usage in the marketplace has its merits. However, it’s no surprise that alternative, market-led initiatives are also manifesting themselves. One of the key criticisms of open banking has been that the standardized process leaves the APIs at a bank-level as homogenous with a limited impetus for diversification. Open banking markets like Singapore and the “framework” approach of MAS — as we mentioned before on the blog in our post on the evolution of APIs in open banking — leave much more room for taking advantage of commercial imperatives, for both Consumers and Providers alike. Taking this market-led approach is leading to the development of platforms like the re.alto marketplace, that try and provide the means for Consumers and Providers to take advantage of APIs in a more commercial manner. Alexandre Torreele, CEO of re.alto, describes the power of the marketplace in the following way: “As the energy transition towards a more sustainable system accelerates, cooperation between decentralized and numerous stakeholders is becoming key. We believe digitalization of scalable business models is a big part of this transition, and our marketplace aims at providing the tools for these digital products to reach the many easily.” Given the mix of both standardization efforts and market-led initiatives, open energy has the potential to become a core tenant of the open everything economy. It also has the advantage of reaping the lessons of open banking to avoid the pitfalls of strict adherence to regulatory mandates. Open Logistics Logistics and supply chain management is an area where incumbents may seem to have a vested interest in resisting openness — to lock in customers — but given the state of the technology that backs the sector up, APIs are a means to modernize. Much of the integration in this sector is based on Electronic Data Interchange (EDI), a 40-year-old technology that uses protocols like EDIFACT to communicate. APIs present an opportunity to provide a more flexible, open approach to logistics and supply chain management, with many protagonists in the industry promoting the benefits. There are also standards initiatives underway to ensure a consistent base for this transformation. For example, Open Shipping proposes a standard for both an Event and Tracking. Whether logistics and supply chain management will ever become open in the way banking is becoming remains to be seen. However, in an ever more interconnected world reliant on healthy and responsive supply chains — which can only become more so despite the best efforts of COVID–19 — APIs are critical to success. Final Thoughts Open everything is in its infancy. As we’ve described, global initiatives and consultations are underway across many sectors, either waiting on feedback from industry representatives and interested parties or starting to forge ahead with standardization efforts. Open banking may be leading the way, but it’s still evolving and finding the correct balance between regulation and market drivers. Moreover, each initiative needs to ensure they reflect real human beings’ needs and respect their data privacy rights. Open everything also tends to focus on what is considered to “need” disruption. It is not surprising that sectors, like banking and energy, are key targets. However, as we look to the future, open everything will move into other areas that are currently considered nascent, like travel and transport. Take our opening paragraph as an example. There is a role for an “open” approach to social media. These platforms are, of course, built on APIs. However, increasing interest from governments in regulating and monitoring social platforms and user disillusionment with content may force a situation where these platforms need to open their platforms in ways they currently do not. As we become more and more reliant on social platforms for human interaction, access to the platform — and our data within — may move from the realm of “nice to have” to a basic human right. Giving people a right to vote with their virtual feet and move from one social platform to another is not inconceivable and — with regulation backed by APIs — may become a reality. When open everything becomes a reality, expect the disruptors to become the disrupted.