Universal APIs — those that offer a single integration point to access multiple third-party systems — have emerged as foundational elements in modern software ecosystems, particularly within fintech, commerce, and business operations. Their early appeal is clear: standardisation, reduced integration cost, and accelerated product development.
Yet beneath the surface lies a structural vulnerability. The factors that drive early growth — such as breadth of integrations and developer experience — are not defensible. As the market matures and new entrants proliferate, the competitive edge enjoyed by early movers begins to erode.
The central strategic question is no longer how to build a universal API, but how to defend it.
The Limits of Horizontal Coverage
Many platforms initially compete on data coverage: the number and diversity of integrations offered. However, the assumption that broader coverage always yields superior client value is flawed.
Clients never really require universal coverage — they require coverage that is fit for purpose for whatever it is that they do.
Some demand depth in a single domain, such as accounting; others prefer high fidelity in commerce; or payments; or payroll; & so on. In each case, there may be nuances - vertical-specific schemas, low-latency sync requirements, use case-specific insight layers. It's not long before "one-size-fits-all" becomes "one-size-fits-none".
So specialists arrive — smaller providers that address a narrow use case with greater intensity and speed. And as the space fragments, the notion of being "universal" becomes harder & harder to sustain.
Platform Dependency and Supplier Risk
As if that wasn't hard enough, Universal APIs face challenges on the supply-side, too.
Their value proposition depends on access to upstream data providers — ERP systems, commerce platforms, HR tools, and the like.
Yet, unlike regulated ecosystems (such as those governed by open banking directives), most API suppliers operate without obligation to support third-party access. Access can be withdrawn or curtailed with little notice. Strategic shifts, such as vertical integration or the promotion of proprietary ecosystems, can render previously reliable integrations unstable or obsolete.
This dependency creates a fragility that is often underestimated. A sustainable API strategy must therefore address not only demand-side growth, but also the security and resilience of its supply-side relationships.
Enabling the Flywheel
The defining characteristic of the most defensible software platforms is the presence of a network effect — an economy of scale in which each additional user increases the value of the platform for others.
At present, most universal APIs do not benefit from this demand-side phenomenon. Their utility comes from the supply-side: each new integration adds a marginal benefit to the platform's utility for a subset of users. New clients don't really make a difference to the value of the offering (except to the extent they uncover edge cases, enabling a more battle-hardened set of integrations - but this is a reasonably weak competitive force).
But it doesn't have to be this way. Look closely and you will find plenty of potential to foster demand-side network dynamics - but doing so requires intentional design.
One approach is to collapse the distinction between clients and suppliers — transforming platform participants into both consumers and contributors of value.
Consider a digital lender that uses a Universal API to retrieve financial statement data from accounting systems. If it could also distribute its lending services via the same Universal API, it would switch from being a passive consumer of the API to a contributor: providing value to other clients in a way that previously it did not.
This dynamic is extendable. Commerce platforms might expose their user base to accounting solutions, POS providers could acquire customers via embedded accounting tools. Payment providers could distribute their rails through third-party applications.
In each case, the universal API gains defensibility - and guards against supplier risk - by acting as the coordination layer for value exchange — becoming increasingly valuable as participation grows.
Reframing the Role of the End User
Another underutilised axis of value is the end user — often an employee, SMB or merchant — whose data flows through the platform.
At present, most universal APIs treat end users as static entities. Yet if their presence, behaviour, or data footprint could inform or enhance the service for other clients, the platform begins to exhibit scale advantages typically seen in consumer marketplaces.
Features such as identity provisioning, consented data sharing, or benchmarking models trained on aggregate datasets can shift the value centre. When user participation enhances the predictive accuracy or business value of insights delivered to clients, data gravity begins to take effect.
The challenge lies in constructing the necessary infrastructure: unified data models, secure key management, and permissioning schemes that meet both regulatory and commercial expectations. But the strategic prize — an active, data-rich network — is significant.
Strategic Implications
To move from linear API growth to durable platform advantage, universal APIs must reframe their role:
- Not as a data aggregator, but as an ecosystem coordinator.
- Not as a convenience layer, but as infrastructure.
- Not as a product, but as a network.
This transformation is difficult and requires trade-offs. But those who achieve it will benefit from increasing returns to scale, higher switching costs, and a strategic position that cannot be easily copied.
The future of universal APIs will not be won by breadth alone — but by building systems in which participation creates value.