How APIs are transforming the wealth management industry
In the past decade, APIs have transformed how we live in a digital-first interconnected world, bringing together the front and back-end systems, powering a multitude of services for individuals and businesses and dramatically improving user experience across the internet.
As a consumer, you’re using APIs every day while shopping online, booking hotels or flights, posting on social media, streaming on Netflix or even accessing weather data.
According to a Research and Market report, by the end of 2024, the global API management market is expected to reach a massive $6.2 billion in 2019!
But what are APIs, and why do they matter to the Wealth Management Industry? Let’s explain.
APIs are actually quite a simple concept. It’s a software intermediary (language/protocol) that allows two websites or applications to talk to each other.
APIs (Application Programming Interface) allow multiple applications to communicate and share data in real-time. They’re a vital information exchange that has transformed every part of how we live in the digital age. They take requests from the provider, translate them, and deliver them to the receiver.
A typical example of APIs would be the ones that brokerage platforms use to get real-time information about prices, details for indexes, individual stocks, and more. This helps the investors make buying or selling decisions from their choice of banks.
At WealthKernel, an API provider of investing infrastructure, that means our system can process requests from our customers (retail platforms) like this: “Buy £2000 shares of the Liontrust Sustainable Future Corporate Bond Fund” for Mr Joe Bloggs in his ISA.
But it would appear like this:
APIs in Wealth Management
Technological advancements are upending wealth management in the 21st century. Barriers to entry are being lowered all over the place, mass digitalisation and customisation is flourishing, and cheaper more advanced infrastructure is powering a diverse and exciting landscape of new and innovative investing products. As a result, companies are expected to offer excellent user experience and more affordable quality services, and this is where APIs play a vital role.
With increased availability and access to financial data thanks to APIs, wealthtech firms can quickly develop new products and connect with different financial systems and tools to improve their products and user experience.
The embedded finance movement can largely be credited to the advancements in API integrations - embedding financial services into the user experience of non-financial companies with ease and sophistication.
Here are some other key reasons the WealthTech industry is tapping into the potential of APIs:
- It saves time and resources: Manual sourcing and data gathering can be time-consuming and is typically prone to error. APIs automate and standardise this process.
- User friendly: APIs offer a single point of access to data stored across various systems, allowing users to view their transactions, savings and investments in one place.
- Scalable: The real-time data flow, user-friendliness, automation and standardisation offered by APIs have helped wealthtechs scale their offerings.
- APIs can also be used to fully digitise a business’ onboarding process and automate money management, making life easier for companies and giving them time to focus on client experiences.
Transforming WealthTech with investing APIs
APIs offer a flexible way for businesses to scale and improve product offerings. Although they’re essentially just points on a network system, APIs have helped wealth and investment companies offer unique services to their customers.
For example, using a flexible investing API as one of the building blocks of their business, financial coaching app Claro seeks to change how retail investors access financial knowledge, tools, and products. Similarly, investing app Stratiphy looks to help users align investments to their values with the help of ESG ratings using our investing infrastructure API.
Consumers today understand the digital wealth landscape and have high expectations around digital experience. They look for personalised products and services to meet their unique needs, which is where APIs come in handy. These ‘points on a network system’ may hold the key to developing new services, products, tools and revenue streams and drastically reducing the cost of existing processes.