It’s no surprise that digital transformation is at the top of every strategists to-do list. Given the rapid pace of technological change, providers are prioritising their online experiences to meet the needs of digitally-native investors.
To meet these demands, financial service providers need to ensure that their overall systems architecture is flexible enough to support and facilitate these types of digital experiences. You need a file transfer system that can effectively support your business processes both now and in the future.
Let’s have a look at the two most common types of file transfer systems, namely secure file transfer protocols (SFTPs) and application programming interfaces (APIs).
What are SFTPs and APIs?
SFTPs are one of the most common integration methods. This is where a flat file (such as .csv documents) gets manually updated, encoded and then transferred through a secure channel between platforms. It’s a simple protocol and only requires one connection to one port.
We’re starting to see that software systems are slowly moving away from FTP systems due to privacy and security concerns. FTP systems are not encrypted and can only handle username, password or account information in plain text. You’ll often find that older software or legacy products will make use of these FTP systems.
So how do APIs differ? At its core, APIs are just a set of codes that allow two separate programs to send data to each other so that they can work together. Think of it as the glue that allows multiple systems to collaborate and share data in real time. It allows different solutions across your digital architecture to seamlessly share information and work together instantly - without having to login to each system to share this data.
So, why do I push FSP’s to leverage APIs more?
It’s simple really: APIs open up a world of possibilities for FSP’s to streamline their operations and better service their customers. Opening up and sharing data across solutions helps providers get a more holistic view of their business and customers, which can help to drive further innovation at an individual company level, which spurs innovation for the industry as a whole.
For an organisation to operate effectively and efficiently, data needs to be able to move between systems as freely as possible. However, if it is siloed in disconnected systems, it becomes incredibly difficult for providers to pull crucial information across to display to both customers and internal staff members. APIs are an effective way to enable efficient integration that allows for accurate, relevant and up-to-date information to flow throughout your organisation.
For example, we recently completed a project for one of our clients who wanted to encourage their investors to offset their carbon emissions during the onboarding process. This required us to integrate with another third party provider to pull through the relevant data. APIs make this type of integration possible, and can open up a world of possibilities for providers to tap into a wide range of digital tools to improve the investor experience.
APIs help foster a more agile approach to digital transformation, as the flexibility enables FSP’s to access and connect to best-in-breed solutions. No longer are providers hamstrung into buying an all-in-one solution, but can rather pick and choose multiple tools and functionality from different providers that best meets their unique needs and objectives.
APIs also enable swifter processing of data, which drastically improves the overall experience for both investors on the front-end, and employees on the back-end. Automated data sharing helps to free up the workforce, simplify workflows and streamline internal processes, which has a tangible positive effect on the bottom line at the end of the day.
Analysing data and gathering contextual information becomes a much quicker and simpler process, which is incredibly important for executives who need to formulate strategies on the fly to navigate an increasingly competitive landscape.
A central hub to collate, store and display information.
To get the most out of your API setup, you need a central point, or system, that serves as a storage point - a black box of sorts. This black box is a crucial collection of all the data shared between the different API-driven tools, and is the “command centre” that houses key bits of information about the company and its customers.
By layering an analytics tool or dashboard onto this “black box”, providers can access real-time information gathered from all the tools that make up the digital architecture. In a single screen, employees can clearly see customer information at both an individual level, and at a segment level. It just comes down to what information is being collected and where it is coming from.
For example, by connecting your marketing platform to your sales platform, you can see whether an existing customer has visited other product pages on your website. From a sales point-of-view, this information is invaluable when encouraging cross-selling.
When you’ve created an API ecosystem, the amount of information that can be extracted from each point in the customer journey provides so much potential for wealth providers. As long as you know what information is being collected and where it is coming from, it’s pretty straightforward to program this request into your analytics system.
It’s why we’ve developed our user analytics tool to be as flexible as possible. It gives our customers the ability to deep dive into their customer journeys so that they can better support and serve their investors. The aggregated data enables better oversight of customer investment and behaviour trends in real time, allowing the company to quickly adapt to changes and proactively move with the market.
The growing adoption of open banking practices globally indicates that fintech and financial services industries are certainly moving towards a more collaborative approach. Providers that adopt a more open, API-driven ecosystem will initially have a competitive edge, and will be in a position to shape and set the standard of service that investors will come to expect from wealth providers. The use of APIs are key to building a scalable and flexible architecture to drive successful digital transformation goals.