Last week the Danish multi-asset trading and investment firm Saxo Bank announced that it would open access to its trading infrastructure with the launch of OpenAPI. It's not alone.
Financial services has seen increasing use of APIs, which essentially allow partners and other third parties to piggy back off existing technology. By using APIs, partners or clients can leverage existing functionality to quickly develop customized applications, services or tools. APIs also give firms a new way to offer technology assets to third parties that may want to use the technology in different ways.
In the case of Saxo Bank, OpenAPI covers Saxo's multi-asset trading and back office infrastructure, allowing partners, customers and developers to access the bank's technology to create customized trading experiences or leverage the technology to develop new revenue streams.
At the Finovate Fall 2015 conference in New York last week, Xignite, a provider of market data cloud APIs, announced the launch of an industry-wide initiative to connect fintech developers with best-of-breed financial APIs. The initiative, called #FintechRevolution API Ecosystem, has 21 founding members, including Yodlee, Stocktwits, Tradier, and Nasdaq, as well as fintech accelerators such as Level39 and ValueStream. The initiative will create an API catalog, powered by Xignite, assembling APIs into market categories to promote simpler, lower cost, methods of developing customized automated tools and services.
Aside from simplicity and speed, some see the move toward APIs as a sign of another trend in financial services as well. Dan Raju, CEO and co-founder of Tradier, which bills itself as a full-service API brokerage platform, sees the adoption of APIs as facilitating the unbundling of financial services, from fully-packaged investment services to a more customized, a-la-carte model.
"The traditional model, where large brokerage firms have been offering us complete packages services that they think we need is fast collapsing to the new way where customers are asking for their own customized experiences," Raju said in an interview in April.
Raju expects advantages of lower cost and simplicity to translate into much greater choice.
"The greatest part of all this is that for investors, we have almost unlimited choice, and for new entrepreneurial companies and existing companies, they are able to offer new variations and combinations of products that they could never do before," he said.