OPENING YOUR WEALTH PROSPECTS The Benefits of APIs for Wealth Management

Mike Tropeano, CFAVice President and Business Development Executive, FIS

INSIGHTS PAPER

2 Insights Paper – Opening Your Wealth Prospects

Wealth management firms are still largely dependent on legacy enterprise systems that rely on point-to-point integration. These systems are costly to maintain, difficult to support, and generally unable to deliver data or execute transactions in a timely manner. As a result, challenges emerge when firms attempt to enhance connectivity, increase functionality, or deliver better experiences to clients. Modernization efforts therefore, are critical for firms to remain competitive.

Application programming interfaces (APIs) are a set of routines, protocols and tools for building software applications. 1 They specify how software components should interact and provide the building blocks for larger applications. APIs are commonly

used to move transactions between systems and deliver data in real-time or near-real time. They provide simpler integration with existing applications, streamlining across applications, automating tasks, and enabling digital innovation and agility.

While change for change’s sake is never a good strategy, wealth management firms should understand and quantify the benefits of applying a new approach to integration.

3 Insights Paper – Opening Your Wealth Prospects

Enhancing client experiences digitally

Client expectations continue to rise. Technology companies such as Netflix, Facebook, Amazon and Google have trained investors to expect a seamless, personalized and engaging customer experience across a variety of devices in real time. Additionally, clients are eager to initiate transactions electronically and seek transparency into their progress, but most wealth and trust transactional systems are not intended to be client facing. As a result, there is a need for solutions to integrate seamlessly to deliver data in a more timely and personal way.

Supporting these needs with traditional point-to-point systems is nearly impossible. APIs, however, can deliver an improved user experience by serving up data instantaneously from across applications, tying together multiple sources and providing a single, unified picture to the advisor or investor.

Improving efficiency of client-facing teams

Many applications are required to support the typical wealth manager or trust company. While not all applications require real-time updates, there is clearly a need to ensure that data is delivered and available when needed. Bulk loads of all data elements during the trading day, for example, is inefficient and can create other challenges, such as reconciliation issues caused by incomplete or missed transactions related to timing of the load.

Just as important, advisors must have access to client data quickly and efficiently. For example, Charles Schwab found that 88 percent of investors value timeliness to responses as a driver of trust. 2 They also expect the conversation will reflect the most up-to-date information about their account. An incorrect response to a client inquiry can negatively impact the relationship, and the longer it takes to answer the question, the more doubt there is in the mind of the investor.

APIs can provide data from across systems and automate tasks by streamlining integrated applications. This decreases the administrative burden on advisors and increases productivity by providing information in a single source. Instead of having to toggle between applications and compile data manually, advisors can have everything they need in one view and spend more time engaging with clients.

4 Insights Paper – Opening Your Wealth Prospects

Reducing costs and improving time to market

Continued pressure on investment management fees has translated into a need to control operating costs. Competition from low-cost, automated or passive investment platforms means clients have more options available than ever before, and wealth management companies must, in response, demonstrate value while also providing a level of service and flexibility that stands out from competitors. Maintaining legacy infrastructure is not only costly, but it inhibits the organization’s agility and ability to adapt to new trends.

APIs reduce the dependence on customized point-to-point interfaces by providing reusable components that are more adaptable and flexible. They can be used across multiple use cases and can contribute to a more economical technical environment. Additionally, APIs can significantly accelerate time to market by lowering development time and costs, increasing flexibility and allowing organizations to scale as required.

APIs can significantly accelerate time to market and allow organizations to scale.

5 Insights Paper – Opening Your Wealth Prospects

Growing your business with APIs

Enhancing connectivity and leveraging the power of APIs helps set the foundation for the future by alleviating many of the challenges wealth management companies face today. With simpler integration across existing applications, streamlined automation of tasks and the enablement of digital innovations, organizations must redefine their architecture with the next generation of APIs to meet the demands of clients, run efficient operations, and achieve long-term growth and success.

Putting APIs to work in wealth management – Three use cases

Customer relationship management integration

In a Wealth Briefing and Fenergo study, one-third of North American firms reported that it took more than 20 days to open a new account. 3 Integrating a customer relationship management (CRM) application into a core accounting system by leveraging APIs to deliver data in real time, streamlining workflows, and reducing hard copy handoffs can help reduce the amount of duplicate entry required and accelerate the delivery of client-facing documentation. The result is shortening the time required to open an account and reducing operational risk. Of course, because not all information required to open an account is stored in the CRM, a hybrid solution can deliver data downstream via an API to supplement data and deploy a workflow process to manage approvals.

Digital engagement via online or mobile

Digital client interactions are increasing and the activities that clients expect to perform online or via mobile are expanding. Additionally, the FIS PACE Report notes that 97 percent of consumers say a smooth, easy customer experience is important when choosing a bank. 4 Moving toward a more open technical architecture, delivering data through real-time APIs, and initiating different transactions via an API are the first steps in digitally enabling clients.

Data integrity

Data extracted from two or more systems that are not tightly integrated can deliver unreliable results. The impact of intraday activity and updates will lead to inconsistencies. Leverage real-time APIs will enable applications to communicate in a more timelier manner, reducing reconciliation items, improving the quality, reliability and trust in the data.

6 Insights Paper – Opening Your Wealth Prospects

About FIS

Sources

FIS is a global leader in financial services technology, with a focus on retail and institutional banking, payments, asset and wealth management, risk and compliance, consulting and outsourcing solutions. Through the depth and breadth of our solutions portfolio, global capabilities and domain expertise, FIS serves more than 20,000 clients in over 130 countries. Headquartered in Jacksonville, Florida, FIS employs more than 55,000 people worldwide and holds leadership positions in payment processing, financial software and banking solutions. Providing software, services and outsourcing of the technology that empowers the financial world, FIS is a Fortune 500 company and is a member of Standard & Poor’s 500® Index. For more information about FIS, visit www.fisglobal.com.

1 - https://www.webopedia.com/TERM/A/API.html

2 - Consumer Digital Demand, Charles Schwab, October 2018

3 - Connecting the Client Journey, Why Onboarding Remains an Untapped Opportunity for Wealth Managers, Wealth Briefing & Fenergo, 2019

4 - FIS PACE Report 2019

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