Fintech Strategy – laying the technology groundwork


The tech stack of the future

The buyside is hampered by legacy technology stacks and outdated approaches to data management. The changing pace of technology means that applications will become redundant more quickly and demand for change will continue to increase . Firms should be looking at how to make their technology stacks more ‘plug and play’ – so that systems can be easily replaced when something better comes along.

Gone are the days of multi-year waterfall projects, overnight batch processing and on-prem customised installations. The technology stack of the modern firm will be based on cloud, APIs and microservices.

Make APIs work well internally

APIs (acronym for Application Programming Interface), are software connectors that allow applications to talk to each other and exchange data.

Imagine you have a master data source for all your products and you want to process a change request. Today you probably have a bunch of systems that hold this data – CRM, Investments, Operations and Reporting.  The change request would often be managed by email, maybe you have workflow – but each system would be updated manually. An ‘API first’ architecture enables you make the change in the ‘master data’ source and then push it out to the downstream systems via an API. Bye-bye manual processing, bye-bye data reconciliations and bye-bye human error!

By having an interconnected API infrastructure, one change to a single dataset will ripple across your entire model.

Make APIs work well externally

Uber didn’t build their own maps (Google did), they didn’t build their own payments system (Stripe did), they didn’t even build their own messaging system (Twilio did) – you get the idea. You can access the best in the market using APIs.

The trend for APIs is growing everywhere – Asset Servicers are likely to be implementing new APIs to exchange ‘real-time’ data with their clients. Asset Owners are increasingly looking at API solutions to aggregate data from multiple managers. Wealth Managers may increasingly find that they gain an edge by linking with Open Banking products. Industry products like ‘Morningstar’ or ‘Lipper’ all have APIs to connect to their solutions. You can also connect multiple SaaS products via APIs like Salesforce to Eventbrite to manage and track your clients and events.

APIs when used well with third parties can give you access to market leading products, 21st century tech skills all with seamless integration to your tech stack.

APIs as a route to market standardisation

All eyes are on the Open banking / PSD2 transformation in the retail sector, but the wider buy-side could benefit from agreeing similar standardisation via common API libraries – and if we’re not forced by the regulators – maybe we should work together to make it happen ourselves.

There are a number of new IBOR products that interface with other systems via APIs – like Finbourne or Aprexo, which will allow rapid integration between your IBOR and downstream systems for risk, perf, investments etc.. Firms like Finsemble, Openfin or the FDC3# consortium are using APIs to integrate financial desktop software and enforcing standards as they go. Standard API libraries could be the route to greater standardisation and collaboration across the industry.