Developers: register your API key and start your own credit union/bank

Imagine if a bank or CU was exposing their system via a GData-like API, and was outsourcing innovation to third-parties, possibly creating a dedicated VC fund or prize to finance startups building applications on their API, managing innovation as a good old option portfolio, possibly acquiring only the most successful and profitable of these innovators.

Well, that’s not really possible yet, but it seems the idea is in the air, at least the API part. Here are some excerpt from the comments section of OpenSourceCU report on BarCampBankDallas. Here is a summary:

In the current economic context, some credit unions may be pushed to innovate to survive, and one effective tool would be to expose their API. Tim McAlpine says:

As far as the API goes, traditional FIs are the opposite of open source. Being open requires a start-up mentality. Unfortunately today’s old dogs are more interested in keeping the vault full and closed. […]

This API opportunity lies with the credit unions. If an open CU was backed into a corner to survive, they may think differently if we could get them to understand the concept and potential power of an API. This type of CU may be ripe for innovation and may just turn that API over. If they did, I bet the geek world would love to slide in the door and innovate on their behalf!

In a subsequent comment, Robbie Wright took this vision to the next level: what if someone was providing a platform for anyone to start their own financial institution, leaving the difficult paperwork part to the platform provider:

I believe a large opportunity exists in helping people start new CU’s. It is so tough from a regulatory perspective and from a capital perspective, that it always seems starting a CU is impossible. That is what we need to change. Aside from the open source core processor idea that has been kicked around for a while now, there exists the possibility to create an entirely new industry of the outsourced FI.

Now, what would this API would look like?

2 thoughts on “Developers: register your API key and start your own credit union/bank”

  1. G-
    We’ve had quite a few conversations about what the specific API would look like and how something like that may work. On a high level, I strongly believe we could start an entire industry of the “out-sourced” FI, with the core processor/API being one aspect of it. I love the dedicated VC/prize idea for new software based on it although, I’m not sure the whole outsourced innovation thing would work. The way I look at it, you outsource the nitty-gritty and let your employees focus on innovation, not operational details. I’d love to chat more with you about the concept!

  2. Standards like OFX and FIX would provide a leg up in terms of coverage (in terms of both functionality and critical mass of compliant institutions) even though they’re not as user-friendly as typical web APIs.

    Very interesting idea. I wonder what the killer mash up would be. If twitter fixed their reliability issue, the command line format opens up many opportunities.

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