Demystifying integrations

APIs have become the latest buzzword in financial advice integration, with advisers, providers and technology firms all seeking to save time and money by connecting software and systems to allow for easier sharing of data and automation of processes. However, while the term has become commonplace, those outside of fintech circles may not really understand what it means. Here we aim to demystify integrations and explain how advice firms can utilise APIs for the benefit of their staff and clients.

What do we mean by integration?

At a basic level, integration is the process of uniting different things. One of the frustrations we frequently hear from advisers is that their technology doesn’t link up fully: there’s still too much rekeying of information and too often you, or the client, has to access multiple systems to complete the customer journey.

In an ideal world, you want systems to share information automatically so you don’t have to rekey any client data. At the same time, you want to be able to move seamlessly between different advice tools without the inconvenience of logging out of one and into another. You need your systems to talk to each other, share data and continue processes with minimal manual intervention, streamlining the user experience to create a single, straight-through journey for the adviser, paraplanner or client.

Thanks to the rise in APIs, this type of technology integration is no longer just a pipe dream.

What is an API?

An API, or Application Programming Interface, is a set of defined rules that allows different systems to speak to one another. To put it simply, the API works as an intermediary, passing messages between systems that can’t communicate directly to provide a way for them to connect and transfer data securely.

They have revolutionised how we integrate technology. A decade ago, system integration meant two providers getting together to build something specific to connect their technologies. While this did the job, it took time and money to achieve and created an ongoing need to maintain all the bespoke links between different parts of the chain. Due to the complexity involved, this level of system integration was only completed for key functionality, leaving most data sharing to manual processes.

For financial advisers, pulling data out of different systems by hand used to mean producing a client report could take several days. Today you can complete the same task in minutes, largely thanks to APIs which allow your internal and external data sources to integrate with your back-office solution.

The use of APIs has skyrocketed in recent years. The growing use of data across all industries means that enabling systems to communicate seamlessly with each other and automate processes is increasingly important. A survey last year by RapidAPI among 1,500 IT professionals, found that 61% used more APIs in 2020 than in 2019 and 71% expected to use even more in 2021. The survey also revealed that financial services was the industry with the highest expected API usage.