Application Programming Interfaces (APIs) play a central role in opening up additional integration and customization possibilities for wealth managers. In their simplest form, APIs are just the points on a railway network for information exchange between computers. But the way they can be harnessed and added onto existing systems to enhance an offering is transformational.

Matt Law, Chief Technology Officer at United Kingdom-based Northrow, comments: “An API is a way for a computer system to expose some or all of its capabilities so that they can be used by other computer systems. It enables companies to develop software that automate processes that might previously have been manual, accelerate processes and build new products by combining multiple systems.”

Standardization is a key facet of APIs. Adopting common standards for the definition of APIs, the structure of the data transmitted and the security principals that protect that data are important. This makes it easier for developers to build products using APIs, and it ensures reliability and trust between parties. A key part of any technology infrastructure’s development.

Standardised APIs can then be readily integrated into existing client portals, customer-facing front-ends and tooling specifically for both front and back end. They effectively service as a powerful add on to a single core engine.

Oliver Moule, Business Developer in the UK for Netherlands-headquartered Ortec Finance, comments: “APIs unlock an easily integrated and adaptable interface. This interface can be readily configured and implemented to suit the needs of different channels, business units and client segments. A key advantage of APIs is the extent of integration and customization possibilities that they offer, allowing freedom in business logic, user experience and configuration.”

No surprise then that many core banking systems and other providers are opening their APIs, and fundamentally changing the landscape of banking architecture in the process. Indeed those not choosing to enable themselves with APIs are, very possibly, going to fall behind.

What are the specific value adds of APIs within wealth management?
What does this mean in practice for wealth managers? Where are they using APIs to greatest effect and how might this evolve?

Dan Scholey, COO at Bristol, United Kingdom-headquartered Moneyhub Enterprise, comments: “This really is the beginning of a transformation in the wealth management space. We have seen some attempts to introduce robo-advice but until these are genuinely based on a holistic customer view, they can't properly help consumers. But access to data via APIs does facilitate progression.”

Introducing an API can push towards giving an omni-channel unified view of a given customer. If clients and advisors both have access to a single, unified view of the wealth position, financial goals and related information (tailored to their relative knowledge level) across all channels, this would allow both to constantly stay on top and be reassured of their financial health.

Moule comments: “In a monitoring application, back-office systems communicate the latest wealth positions of a client (through APIs) to a calculation engine. The engine (API) then re-calculates the wealth projections and the feasibility of financial goals to determine if they are still on-track or off-track. The updated results are then fed back to the advisor tooling (front-end), which can then use the information to set up a meeting with a client.”

APIs are also immensely helpful when it comes to regulation and compliance. Here an API integration can provide automation and standardisation, this equates to cost and efficiency savings for the wealth manager.

Benoit Hailly, Managing Director of Switzerland-headquartered indigita comments: “There is huge demand for API services within the compliance and regulatory areas where departments are so cost and time poor as it is. They bring data and information that might be held centrally elsewhere to a specific function, like compliance – making the process far less painful and time consuming.”

And Scholey says APIs can help, for example, to make onboarding seamless. “The ability to cut out several layers of processing payment initiation services will make fully digital onboarding journeys and automatic money management possible.”

All of this essentially makes life easier and more efficient for the wealth manager. It enables better levels of customer service in both the provision of information to the client and in that the wealth manager is freed up from onerous manual tasks and should have more time for the customer care element of his or her role.

Uday Nimmakayala, CEO and Founder of United Kingdom-headquartered WealthObjects, says: “APIs offer a seamless and flexible way to grow the experience and, in the end, a better experience generates revenues which is what any company is interested in at the end of the day.”

Being able to add on so many components adds up to being able to create something that is effectively a fully customised best of breed ecosystem that leverages the capabilities of different APIs, in order to assemble, scale and adjust.

This means that firms can be up and running quickly and add on as and when they choose.

Nimmakayala comments: “APIs mean wealth managers are able to choose whether they want an entire front to back proposition or whether they just want to use certain parts in tandem with their own systems.”

But how might things develop? There is little doubt that APIs are here to stay but, with so many providers, does a round of acquisitions and partnerships look likely?

One case in point is the partnership between Germany-headquartered aixigo, an API software provider, and Switzerland-headquartered global management consultancy firm, Synpulse. They aim to bring together aixigo’s digital API wealth management and investment advisory platform with Synpulse’s consulting and implementation services experience.

Hailly from indigita thinks this is a start and that the API providers of today are about to mature into the next step and become part of something bigger. “Inevitably there will be winners and losers with consolidation but at the moment we are in a very open and experimental time where the art of the possible is linked with establishing what is and isn’t actually useful for the industry. It’s an exciting time.”

What is certain though is that APIs are here to stay. Law summarises: “As the world and business continue to become more connected and online, use of APIs to drive connected, mobile applications will continue to grow. APIs will enable greater and greater interconnectivity between disparate services, increasing the ease and efficiency with which we do business and manage our personal lives.”