by: Grow VC Group
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In 2015, the API Economy emerged as a prominent talking point for fostering new innovation in financial services and particularly as an efficient way of piloting new approaches and models. APIs are commonplace across various sectors and industries, however, why is their importance so significant as it comes to financial services?

To take a step back, its important to frame the conversation leading up to existing technology systems in use. Until the 1970’s, the majority of financial services back office tasks were handled by desk clerks with primitive tools comparable to pen and paper. Pioneers such as Sandy Weill led the centralization of the efficient back office, which through the consolidation and growth of Shearson Loeb Rhodes throughout the 70’s spread out through as an industry best practice utilizing technology.

Several leading financial institutions have put in place plans to develop and renew their existing infrastructure. Some have started developing new products in other environments and consciously chosen to exclude their internal research and development processes and their existing infrastructure products. With new API products, efficient technology providing specialized services and infrastructure in place tying it all together in the digital era, many choose new models that are better equipped for the new innovations at hand.

Financial services infrastructure is not only complicated, it is also heavily regulated and complex from a business nature. The infrastructure itself is often low-margin, yet with enormous setup and maintenance costs. As with telco’s, the financial service infrastructure seems to be heading toward a trend of specialized services being built on top of it, reaping the high-margin business and the benefits of specialization, where the underlying infrastructure sets like concrete in the background.

For existing infrastructure, it has been purpose-built. For the world of exchange-traded funds, clearing instantaneous transactions for liquid assets, it has served and continues to serve a clear purpose. The companies we are privileged to work with are piloting new consumer lending, business debt and solar bond marketplaces on digital back offices working through specialized APIs tailored to the digital native market.

Like Sandy Weills effort in the 70’s to streamline back office functions, we can argue we are at the cusp of a new change in digital back offices. Developing new models in 2016, innovators like Sandy Weill would surely agree that using decades old models and processes for new innovation makes for a complicated puzzle.

Read the whole article at Crowd Valley Blog.

 

Finance back office over open API


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Grow VC Group The Grow VC Group is the world leading, global pioneer of securities crowd funding, peer to peer marketplaces, new investment models and global business development. Established in 2009, the Group has developed new investment models on six continents and continues to innovate the global market.

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This entry was posted on Friday, January 29th, 2016 at 2:00 pm and is filed under Business Updates. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.