A humble API

This morning I met with a group of women interested in financial technology innovation. I gave them an overview of Descant technology and its significance to small businesses trying to access capital and credit.

The questions were many, thoughtful, and challenging. I especially enjoyed the technology questions. I love to talk about how we thought through managing small business data submitted by each business.

In my effort to avoid jargon I missed clarifying a key point. It has to do with a question I was asked about how data comes into our system. I did point out that we don’t claim any proprietary interest in that part of the system and are using other innovator’s tools. But it is very important that a new open standard has emerged called the Open Authorization Protocol.

Many versions have been released over the years since OAuth 1.0 in 2006. OAuth 2.0 is a relatively recent phenomenon. People who deal with APIs all the time sort of yawn over it. I think it’s a massive turning point for the credit industry.

What it means in practical terms is that, for example, I can use any accounting software online (or backed up online) and then decide I want key financial information in that software to stream to another service or platform. For Descant, it means an easy way for a business owner to log into Descant, create a profile name and then authorize balance sheet and income statement data, as far back as I’ve used that software, to display in my business credit profile.

What the system does to visualize that data almost instantly and make it possible to selectively share is complicated, but the open protocol that many great engineers voluntarily developed means we have the opportunity to create our own credit profiles using existing data from private, public and premium sources.

It means we no longer need to depend on credit bureaus to go out and collect data they then sell to our creditors. We can easily build our own profiles and share them directly with our creditors.

For a small business, that is revolutionary. In effect they get the same disclosures regulations ensure for consumer credit, but without having to wait for Congress to act.

I look forward to seeing how this new way to tap into data transforms other industries. Send me a message or comment here if you know of other examples.



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