Financial activities are data-intensive by nature – especially in wealth management, where various types of data are integral to everyday operations. To truly unlock its value and turn it into usable information, data must be aligned to the firm’s processes, but also be relevant and arrive in the hands of those who need it in a timely manner.
This is where Application Program Interfaces (API) can provide significant leverage, helping not only the organization and their usage of the data, but also the speed with which it is exchanged. APIs work like digital highways that allow smooth and fast movement of data turning it into useful information that is necessary for the business and their clients.
How do APIs work in wealth management?
Fortunately, Wealth Management has been ready for the digital revolution that APIs bring for quite some time. According to Deloitte,“The growth of APIs stems from the need for a better way to encapsulate and share information and enable transaction processing”.
APIs with Machine Learning and other forms of AI and automation, together, can help wealth managers and operations managers improve functions like portfolio management, compliance, and innumerable back office processes from onboarding clients to staying on top of the ever-increasing regulatory burdens. When used effectively, they can reduce costs while at the same time increasing revenues and improving customer satisfaction.
APIs are easy to implement
The best part of incorporating a programmable interface is that it can significantly reduce the time to value for solutions by allowing you to gain access to functions and data, without requiring application modernization. APIs can be used to encapsulate existing technologies allowing for individual capabilities to be removed from these legacy platforms and enable more immediate value. This results in reduction of effort required to complete any subsequent modernization.
With APIs, all participants in the Wealth Management ecosystem can enjoy better access to all relevant financial and non-financial data. A properly structured API strategy can make clients more self-sufficient and back office operations more efficient.
APIs allow firms to enhance their platforms by facilitating integration with third-party solutions, and can offer more iterative approaches to a modernization strategy.
Of course, technology-enabled competition is not the only factor driving wealth management firms to adopt APIs. APIs should be viewed as a component of an overall digital transformation strategy that is balanced along the lines of quick wins and longer-term modernization. APIs and a comprehensive data strategy, coupled with an iterative modernization approach, can facilitate increased application agility. This can provide a significant competitive edge by allowing a business to quickly respond to market shifts or expand horizontally when the need arises.