Pershing has released six pieces of code financial firms can use to build customized versions of their software.
Integration is one of the top items on Pershing's to-do list this year. The custodian and its parent company, Bank of New York Mellon, have created the NetxServices API Store to house a collection of documentation and coding, as well as a testing environment, so firms can change the features of their programs. It has partnered with 20 vendors and will offer an open architecture atmosphere to its clients to tailor an unlimited amount of other vendors' programs, such as client relationship management,
financial planning and wealth reporting systems.
"We want to provide how an adviser customizes the experience for the client," said Ram Nagappan, Pershing's chief information officer. "We want it to be flexible enough."
Pershing is currently working on its first wave of integrations via APIs with
four robo-adviser partners: Marstone, Jemstep, SigFig and Vanare. The first set of coding includes account opening and on-boarding.
APIs, or application programming interface, is the code used to build programs and has been an integral part of software building for years. Recently, however, institutions are putting the spotlight on APIs, highlighting the functions firms can personalize for themselves on the back end and their clients on the front end.
"There is a significant change in technology development, where people are building APIs and building an infrastructure to consume APIs," said Rich Cancro, founder and chief executive of Vanare, which created an API framework called Synapse that allows advisers to create their own user interface.
But there's a catch. Implementation of APIs can get complicated, and in some cases, may require assistance from a technology consultant or a background in computer programming.
"There's just an assumption there's plug and play, and it's not exactly that," said Neal Quon, co-founder of QuonWarrene, a technology consulting firm for the financial services industry.
Pershing is looking to mitigate some of the technical issues by pre-configuring integrations with its partners before an adviser asks for them. It's still a
self-service model, so the adviser must pick the functions she wants to incorporate and finish up the process on her side of the software. In situations where firms want to build connections between vendors not partnered with the API store, they'll likely need to find a tech-savvy employee or consultant to manage that project.
TD Ameritrade Institutional, another adviser custodian, takes a different approach to integration with Veo, its ecosystem of more than 100 connected vendors. TD meshes its services with software companies prior to a firm enabling the systems, leaving advisers to choose what partners they want to work with and activating the software. The custodian is currently working on
Veo One, which will integrate selected software vendors on one dashboard.
"When the adviser logs into that application, the data and features provided by TD are available to them," said Chris Valleley, director of technology solutions at TD Ameritrade.
Charles Schwab & Co., the largest custodian for advisers, has OpenView Gateway, an open architecture platform that allows advisers to work with
existing software providers.
Problems can arise with integration — the level of connectivity can miss expectations or data could be entered in multiple formats.
Sue Glover, president of Susan Glover & Associates, a financial services technology consultancy, said advisers should pinpoint exactly what they want to see their software accomplish. Advisers should ask themselves what information and data they need to transfer from one app to another, she said.
Firms instead can choose to use independent programs, which in some cases may already be working with a wide net of other vendors and financial institutions. Mr. Quon said APIs become useful when the adviser is using a software not made for the financial services industry, or wants to create a specific workflow between programs.
"As more application providers publish their APIs, it provides more and more opportunity to expand the integration strategy," Mr. Quon said. "It allows advisory firms the opportunity to build integrations themselves without relying or waiting for the app to do it."
