Application Programming Interface (API) technology will provide advisers with faster and more accurate information about their clients’ financial lives than the data feeds built into systems like Xplan and Coin, says the chief executive of advice technology and consulting group YTML.
Kevin Liao says that, while the current crop of customer relationship management (CRM) tool providers has a crucial role in advice provision, API technology will generate faster and more accurate client account balances than their data feed components.
“With the existence of API, data feeds will not be required,” he says. “Data feeds aren’t real-time and they’re open to manipulation.”
API technology differs from data feeds in that it can interface directly with all prescribed financial services providers, eliminating the lag data feeds have – generally 24 hours – and avoiding the chance of mishandling or error.
“If advisers can’t trust the data feed, they need to check every single time,” Liao says. “But if you’re getting the data from the source of truth, that’s not an issue anymore. Data feeds are a good indicator, but they’re not always timely or correct.”
Push for open banking
The move towards API technology is anticipated by the government, whose Consumer Data Right (CDR) agreement mandates that financial institutions must allow consumers to direct their data to trusted third parties, will be launched on July 1, 2019. Consequently, clients will be able to give advisers a full view of their accounts, including retail banking, investment platforms and superannuation.
While this open banking regime will open up data feeds to retail bank accounts, it will do much more to facilitate the implementation of API-enabled technology. Yet Liao, whose YTML wants to be known as an “interconnectivity provider”, says the feeds found on CRMs such as Xplan and Coin will still have some value.
“Those data feeds [might still] be used more for passive and historical reporting purposes that don’t require the most up-to-date values; doing such activities with live data might require too much computing power for the value it returns.”
Liao laments the lack of understanding of API technology in the Australian advice industry, especially compared with in the US, where they are “a lot more open to shared data”. He says the easiest way to explain what API does is to use the analogy of a large shopping centre, such as a suburban mall or a retail hub like David Jones or Myer.
“Current industry providers are more like scattered shops across cities and suburbs, with everyone either trying to own the entire ecosystem or just operate in a silo,” he explains. “A shopping centre, in contrast, works together as one ecosystem for consumers, with everyone benefitting from the connectivity of having what they need in the same place.”
In other words, advisers can see everything they need, at once and in one place.
“Every provider has an area of specialty regarding the consumer, but no one has a full view of the specific individual,” Liao says. “In the entire financial advice process – from lead generation and engagement to advice and implementation – no one provider will do 100 per cent of the process. We’re trying to link up as many providers as we can, so we can make the process more seamless.”
Liao says that while advisers can access client information across scattered platforms now, it’s “a very manual process”.
“Think of a world where you can just open the door to all that data,” he says.
TOPICS: API technology, Kevin Liao, Open banking, YTML Group