In the ever-evolving digital landscape, APIs have played a pivotal role in reshaping our online experiences, powering a diverse array of products and services while significantly enhancing customer experience.

An API (application programming interface) is a set of rules and protocols that allows different software applications to communicate and interact with each other. It gives developers access to specific functionalities or data from other applications or services, sparing them the effort of building everything from scratch. In other words, it saves companies from reinventing the wheel every time they embark on a new project.

Example code from Huddlestock’s API

Take Uber, for instance. When the ride-hailing giant launched its app, it didn’t need to develop its own global mapping technology; it simply plugged into the Google Maps API. Similarly, online retailers around the world rely on payment gateways like PayPal and Stripe to handle transactions. 

Although APIs are used extensively in many sectors, their adoption in the wealth management industry has been relatively modest. However, with the growing demand for investment opportunities and technological advancements, companies are now harnessing the power of investment APIs to innovate and swiftly introduce new services. 

How exactly are APIs transforming wealth services? 

The versatility of APIs opens up a multitude of applications and potential use cases. Wealth management firms can leverage them to enhance their existing offerings and incorporate new features and financial instruments. Additionally, startups and firms looking to offer complementary financial services can use APIs to create entirely new wealth management solutions. 

Building a retail investment product typically requires a combination of investment APIs granting access to essential financial data, trading functionalities, portfolio management tools and custody services. By tapping into this technical infrastructure, firms possess all the necessary building blocks to offer investment services without delving into the intricacies of backend operations. 

API calls power investment experiences behind the scenes

APIs are usually modular, allowing firms to cherry-pick functionality according to their requirements. This flexibility enables customisation of offerings based on the desired investments, onboarding processes, and payment flows. Consequently, the entire user experience—from browsing assets and pricing to making investments—occurs within the company’s own brand and application. APIs enable firms to focus on areas where they can provide maximum value to their customers. 

What are the benefits of using investment APIs? 

Investment APIs offer a flexible and efficient pathway for businesses to launch or expand their services. Here are some key advantages driving companies towards API integration in investment services: 

  • Revenue: Integrating investment services can unlock new revenue streams. 
  • Speed: Leveraging ready-to-use investment APIs can shave off months, if not years, in infrastructure development time. 
  • Low risk: Using APIs typically reduces costs and shortens time to market. Firms can also benefit from implementing tried-and-tested functionalities from reputable service providers. 
  • Modularity: APIs empower businesses to select modules that align with their offerings, with the flexibility to expand as their solution scales. 

Selecting the right wealth API provider 

Since every business is unique, the key lies in evaluating API providers based on their functionality and data against project goals. API documentation, such as Huddlestock’s, is often publicly available for businesses to review different modules and access code examples. 

Additionally, it’s advisable to engage directly with API providers to assess the suitability of their solutions based on specific requirements. This presents an opportunity to learn about companies already using the APIs and the types of services they offer. 

Anything else worth considering?

While this article has focused on APIs as the key enabler for businesses launching investment experiences, there are certainly other important areas to take into account. Below, we’ve highlighted a few essential points:

  • Regulatory compliance: Investing and wealth management operate within highly regulated industries. To offer these services, you’ll need the relevant regulatory permissions that align with the services you intend to provide and the jurisdictions you plan to operate in. Companies typically have two options: applying for the necessary permissions from the appropriate regulatory authority or becoming a tied agent of a regulated principal firm. In either case, seeking qualified advice is essential to determine the best course of action.
  • Custodial services: Companies will need to ensure the safekeeping of assets on behalf of individual investors. One approach is through a nominee account, where the firm holds assets on behalf of investors. However, this requires the correct regulatory permissions and places the firm in charge of managing and administering accounts. Alternatively, partnering with firms that specialize in managing this process and servicing investor assets on behalf of your company is a viable option.
  • Advisory services: For firms seeking to provide advisory services, it’s crucial to consider how advisors engage and interact with individual investors. Consumers expect a seamless digital experience, so it’s important to integrate this into the end-user experience, taking into account the tools and interfaces needed by advisors.

Since every business is unique, it’s advisable to outline the fundamental components necessary to operate a successful investment service and how you intend to put them in place. A useful starting point is Huddlestock’s Investment Service Designer, which can assist in piecing together these components according to your requirements.

Huddlestock’s Investment Service Designer