Open API Opportunity for Wealth Managers and Family Offices

By Valuefy

May 15, 2023


The open banking movement, and the use of open APIs, has the potential to revolutionise the way businesses operate in the wealth management industry. Wealth managers can leverage open APIs to unlock a myriad of opportunities. These include expanding their service offerings, streamlining operations and driving growth.

Advisors that become early adopters of open banking practices, and invest in the commercial opportunities of open APIs, will play an integral role in the future of wealth management technology.

Enhanced Connectivity

With wealth increasingly spread across multiple banking relationships, custodians and jurisdictions, enhanced connectivity is essential to success, for both advisors and their clients. Open APIs enable wealth managers to connect their systems with external platforms, such as banks, custodian data centres and other financial institutions, in a seamless and secure manner.

Enhanced connectivity allows for real-time data exchange, enabling wealth managers to access and analyse financial data more efficiently. For example, advisors can leverage open APIs to retrieve data on clients’ financial accounts, transactions and holdings directly from a custodian’s system, eliminating the need for manual data entry and reducing the risk of errors.

For wealth managers and family offices, tracking and controlling bankable assets is critical, especially in volatile markets. Better connectivity not only saves time and effort but also provides wealth managers with a holistic view of their clients’ financial information. This enables them to track strategic and tactical asset allocation more effectively and facilitate better investment decisions.

Customised Client Experiences

Open APIs empower wealth managers to deliver customised client experiences by integrating third-party applications and services into their wealth platforms. Wealth managers can use open APIs to provide clients with access to a wide range of financial tools, such as financial planning calculators, risk assessment tools and investment research platforms.

Additionally, wealth managers can leverage open APIs to integrate with other financial service providers, such as tax advisors, estate planners and insurance providers, to offer comprehensive private wealth management solutions to their clients.

By offering these tools within their own platforms, advisors can create a seamless and integrated experience for their clients, enhancing overall client satisfaction and loyalty.

Expanded Investment Opportunities

Open APIs unlock access to a broader range of investment opportunities and enable advisors to connect clients with multiple wealth platforms. These include robo-advisors and alternative investments, such as private equity, venture capital, hedge funds and real estate, which were traditionally only available to institutional investors.

This expanded access allows wealth managers to offer a more diverse and sophisticated investment service. Not only does this enable advisors to enhance the diversification of client portfolios and access greater returns, it also provides advisors with additional revenue streams through fees and commissions.

Operational Efficiency

Wealth managers can use open APIs to streamline operational processes, such as client onboarding, portfolio rebalancing and trade execution, which drives improved efficiency and cost savings. For example, open APIs can be used to automate the process of rebalancing clients’ portfolios based on their investment goals and risk tolerance, ensuring that their portfolios are aligned with their financial objectives, and automate trade execution to reduce the time and effort required to place trades manually.

Improved operational efficiency through automation not only reduces manual errors but also frees up wealth managers’ time to focus on more value-added activities, such as client relationship management and investment strategy.

Collaboration and Innovation

Open APIs foster collaboration and innovation among wealth managers, financial technology companies and other stakeholders in the financial ecosystem. Wealth managers can collaborate with fintech companies using open APIs to develop and deploy innovative solutions to enhance their services and meet the evolving needs of their clients.

Collaboration through open banking is gaining traction in the wealth management community. For example, The OpenWealth Association in Switzerland was formed to enable collaboration between custodian banks, wealth management technology providers and API service providers to develop, maintain and distribute standardised APIs for the global wealth management industry. With rapid adoption in Switzerland, OpenWealth’s standardised practices are driving true collaboration in the ecosystem of custodian banks, independent asset managers and wealth tech providers.

Wealth managers and family offices stand to gain from this new wave of collaboration. They can access banking services cost-efficiently, and serve their clients effectively, without a lock-in on custody banks. They can also connect to an ecosystem of wealth management technology providers with offerings that go beyond financial services, for example mobility, healthcare, education, entertainment, concierge services and real estate. This paves the way for the growth of financial super-apps that combine banking, private wealth management and other services in an integrated way and in one place. Collaboration and innovation of this type enables advisors to keep their offerings fresh and relevant, deliver an increasingly comprehensive service and stay ahead of evolving client needs.

An Open Banking Future

The exchange and management of data through openly available APIs has the potential to transform the private wealth management industry. As open banking becomes increasingly mainstream, advisors can harness its opportunities to drive enhanced service, greater operational efficiency and accelerated business growth.

For more information about Valuefy’s wealth management technology solutions please contact us.

Get in touch to arrange a meeting to explore these themes in more detail and discuss our insights in wealth management technology.

About Valuefy

Valuefy is a premier investment technology lab with cutting-edge solutions serving leading financial institutions across the globe. Its Wealth Management Solutions has enabled Wealth Managers globally by providing production-grade investment technology solutions for an uberized customer experience.

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