Part 2: Adviser Tech Integration: Open vs Closed
I want to talk about how we fix the problem we have in the UK adviser technology landscape. The answer is very simple. We need everyone – providers, platforms and indeed technology providers – to move towards an open API.
The seed was sown when the Financial Conduct Authority (FCA) published their call for input on open finance. And so, the headline is this, whether you like it or not, we need to prepare for change coming over the horizon. Unfortunately, I still see some bad thinking out there. So, we’re going to talk about it and we’re going to fix it.
One of the ideas in this concept of a single integration end point. The idea is that providers can send data to these integration end points and financial planning software and CRM systems pull – and maybe send back – data to these integration end points.
One middle man being proposed is the Origo integration hub.
The problem with this idea is that you create dependency issues. Everyone in this equation becomes heavily dependent on the Origo integration hub; if this goes down, we’re all buggered.
And, in any case, when you think about open banking, it’s not just data flow, it’s also transaction flows. Open banking is now being used in customer identification and payments. Relying on a single party to power all of that is just too much.
If you think about some of the tech providers in our sector, there may be different requirements, such as sending rebalancing information or transaction requests back to the platform. Or, tracking pension and ISA transfers. Relying on a single provider or technology for all of that creates a dependency risk.
Instead, I believe we need to move towards an open API environment. This is already happening – Nucleus, for example, is the only platform with an open API. Intelliflo also has one.
The idea is that each provider publishes their own API. They would only need to maintain a single set of APIs and others can connect to them. The provider can dictate what kind of API they want to have.
Maybe there are standards, but that’s not essential in my view. You don’t necessarily need everyone to agree to the same sort of common standard. In fact, that can be problematic.
If providers publish and maintain their own APIs, those wanting to connect them need to do the development work. This opens up more room for competition, but you could also have aggregators in the middle. In the US for example, there’s Plaid. The likes of Morningstar can plug in and pull the data from this.
This is how we think about it. Timelineapp’s integration plugs directly into adviser CRMs or custodial platforms. There are only four or five underlining technology providers in the adviser platform space - FNZ, GBST (soon to be to be FNZ or not?), Bravura, SEI and Pershing. And, some of them are building their own APIs for the platforms they power.
I do believe that Origo is part of the equation, particularly in pulling data from legacy providers; but, as far as platforms are concerned, they need to publish their own API or get their underlying technology provider to publish one. For instance, FNZ is building an AppStore for the FNZ group platforms. There are similar developments with others in the space.
We’re moving towards an Open Finance environment rather than a closed environment. As I said, the idea of Open APIs isn’t just about information flows. It also sows the seeds for other data down the line. I hope that makes sense.
If you have any comments or questions, let me know over on my Twitter @AbrahamOnMoney. Thank you.