Mar 18, 2023

Banking as a Service has major risks.

Mar 18, 2023 | Brian's Blog

And no one seems to be talking about it.

More and more businesses are relying HEAVILY on APIs that they don’t own, control, or even understand how they work.

Input into the black box → Result returned.

And that…
Is what we call Counterparty Risk.

And lots of it.

1️⃣ The CORE of the business is an API you don’t own.
2️⃣ Identity verification usually goes through another API.
3️⃣ And there are likely other APIs on top of that.

At the end of the day,
You have almost 0 control over your business.

What if the core API breaks?
What if the ID verification starts returning only “yes”?
What if one API is provided by a startup and they go under?

Or what about a business with the Twitter API at its core?

They just cut 70% of their staff.

That API has broken and will probably break again in the near future.

Then what??

These APIs and black boxes are nice and convenient,

But if they break….

It can be a shortcut to a failed business.

What do you think?
Am I being dramatic about this?
Or do more people need to be talking about it?

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