Securities industry 'ripe' for APIs, says SWIFT and BCG
30 July 2019 Brussels
Image: Shutterstock
Application programming interface (API) interest is rapidly growing in the post-trade area, according to a new report by SWIFT and The Boston Consulting Group (BCG).
SWIFT found that over the course of 2018 alone, awareness of APIs among asset managers grew from 46 percent to 72 percent, with the growing commercial interest driving more pilot schemes and use cases, particularly between asset managers and their custodians.
Adoption of APIs in the security servicing industry has been slower than in other areas of financial services in part because it has lacked a regulatory catalyst, the report said.
The report also found asset managers vary widely in their technical sophistication and openness to engaging with providers via API solutions.
Some 56 percent of respondents in the survey perceived maturity of post-trade APIs to be “experimental” while just 21 percent say it is “high” or “medium”.
SWIFT and BCG included calls to action for the industry, which incorporated the mutualisation of common API infrastructure, meaning foundational pieces of API solutions, such as identity management, authentication, security, and network connectivity management should be agreed at an industry level between firms, rather than by individual firms.
It also indicated that the proliferation of multiple standards threatens to diminish the efficiency gains that APIs can deliver and that the industry needs a single API standard that works across providers.
SWIFT and BCG also stated any API solution will need to meet a high bar in data protection and have high levels of resiliency.
Sumitra Karthikeyan, global head of securities servicing at BCG, said: “Wholesale banking is becoming more digital, and APIs have been one of the key technologies underpinning that transformation.”
She added: “APIs are now starting to break into the securities servicing industry, emerging as a leading technology executives turn to as they seek to transition to digital-first firms. While familiar challenges from the past such as interoperability and security are headwinds to adoption, we believe they will be overcome and expect increasing adoption going forward.”
SWIFT found that over the course of 2018 alone, awareness of APIs among asset managers grew from 46 percent to 72 percent, with the growing commercial interest driving more pilot schemes and use cases, particularly between asset managers and their custodians.
Adoption of APIs in the security servicing industry has been slower than in other areas of financial services in part because it has lacked a regulatory catalyst, the report said.
The report also found asset managers vary widely in their technical sophistication and openness to engaging with providers via API solutions.
Some 56 percent of respondents in the survey perceived maturity of post-trade APIs to be “experimental” while just 21 percent say it is “high” or “medium”.
SWIFT and BCG included calls to action for the industry, which incorporated the mutualisation of common API infrastructure, meaning foundational pieces of API solutions, such as identity management, authentication, security, and network connectivity management should be agreed at an industry level between firms, rather than by individual firms.
It also indicated that the proliferation of multiple standards threatens to diminish the efficiency gains that APIs can deliver and that the industry needs a single API standard that works across providers.
SWIFT and BCG also stated any API solution will need to meet a high bar in data protection and have high levels of resiliency.
Sumitra Karthikeyan, global head of securities servicing at BCG, said: “Wholesale banking is becoming more digital, and APIs have been one of the key technologies underpinning that transformation.”
She added: “APIs are now starting to break into the securities servicing industry, emerging as a leading technology executives turn to as they seek to transition to digital-first firms. While familiar challenges from the past such as interoperability and security are headwinds to adoption, we believe they will be overcome and expect increasing adoption going forward.”
NO FEE, NO RISK
100% ON RETURNS If you invest in only one asset servicing news source this year, make sure it is your free subscription to Asset Servicing Times
100% ON RETURNS If you invest in only one asset servicing news source this year, make sure it is your free subscription to Asset Servicing Times
