Financial services firms have made substantial investments in new technology in recent years, a trend that continues. As a result, investment management firms today face the challenge of ensuring seamless integration between legacy systems and new technologies, as they look to harmonize the multitude of platforms they have accumulated. It’s perhaps no great surprise that designing tailored ecosystems to meet the diverse needs of investment firms using the range of tools and solutions old and new remains a challenge, especially when taking into account each firm’s unique processes and
workflows.

Today, investment management is undergoing a notable transformation, with Application Programming Interfaces (APIs) at the forefront of this evolution. To tackle the many challenges outlined above, APIs are being used to streamline different facets of investment management – better connecting systems, enhancing efficiency, and fostering innovation. In this article, we take a closer look at the impact of APIs on investment management, their benefits, and the promising
future they hold for the industry as a whole.

What are APIs?

An Application Programming Interface (API) defines the methods and data formats with which other applications can request and exchange information with the API platform. APIs can be used to build processes that span multiple platforms, efficiently distribute and process data across many systems,
and achieve scalability not possible through human interaction alone.

The cloud with a silver lining

Despite initial concerns, many investment firms have shifted to the cloud, leveraging the benefits offered by APIs. This shift allows firms to maintain control over their data, models, applications, and third-party tools. Moreover, they can integrate legacy applications with modern solutions, enabling
them to create custom ecosystems that align with their business strategies.

Start with the future in mind

The decision to build, buy, or deploy an investment ecosystem that is future-proof is a crucial consideration. Whatever decision is made, it is essential to invest in technology that not only addresses current challenges but is also easily adaptable to meet future business and customer needs. Systems must be scalable, flexible, and open to evolving market demands, harnessing innovative technological advancements effectively.

Why API(s)?

Investment managers are also leveraging APIs to harness the power of diverse data sources, enabling them to convey a compelling narrative to their audiences. By connecting data to the modeling layer and visualization or end-user applications, APIs empower firms to leverage underlying data far more effectively, making fact-based, clear, compelling, and personalized recommendations.

Benefits of an API-led approach include:

• Enhanced data access: APIs facilitate seamless access to various data sources, reducing
  reliance on traditional data vendors and allowing customization of data inputs.
• Process automation: APIs automate repetitive tasks in investment management, leading to
  significant time and cost savings while enabling advisers to focus on strategic tasks.
• Enhanced integration: APIs enable effective communication between disparate systems,
  ensuring smooth data flow, maintaining consistency, reducing errors, and providing a
  comprehensive view of investment portfolios.
• Enhanced customization: APIs empower investment firms to build tailored solutions aligned
  with their unique business needs, including customized dashboards, analytics tools, and
  reporting systems.
• Better compliance and risk management: APIs streamline compliance processes, track
  regulatory changes, integrate compliance data, and facilitate real-time risk management.
• Facilitating innovation: APIs allow firms to experiment with advanced technologies like
  Artificial Intelligence and Machine Learning by integrating them into existing systems.

Why investment firms should prioritize API-first technology

Forward-thinking investment firms are beginning to leverage APIs to create ecosystems for their investment and distribution teams. These systems are being built to match client demand for greater transparency, a highly customized experience, and to create greater efficiencies across the
investment lifecycle. Investment managers can now control their own proprietary toolkits and seamlessly connect them with best in breed solutions, creating a centralized platform that brings together all of the components. These ecosystems should be built in the image of the investment firms that use them, as opposed to the third party who developed them.

Jacobi has extensive experience of how API-first solutions can be effectively used to create tailored ecosystems. For asset managers using multiple technologies and sourcing data from diverse channels, a custom ecosystem controlled by the manager – rather than by a specific vendor – helps
significantly simplify the complexity inherent in multiple systems.

About Jacobi
Jacobi was founded in 2014 with a vision to transform technology used for multi-asset portfolio design, analytics and client engagement. Jacobi provides its services to top-tier investors across the globe with a client base representing assets under management of over US$7 trillion. Its award winning technology has its roots in institutional investment management and uniquely incorporates a market-leading software development kit. This allows firms to build their own models, tools and applications on the platform.

For more information on Jacobi’s highly customizable technology to support the scaling of investment processes and client engagement, please contact us today.