Financial Advisors

Why Not Having the Right API Strategy Is a Client Retention Issue for Fintechs

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The Era Of Walled SaaS Gardens Is Dead

Not too long ago, software platforms could live in isolation. They were built as complete waterfall technologies that served specific broad sets of needs for their clientele. Rarely, did these platforms have a need to cross-pollinate or connect with parallel or competing technologies. Then as services fragmented, and became more niche, the ability to have a simple way to connect became more important. Enter the API era in software development.

APIs allow data to be shared between different applications. Without APIs, different technologies wouldn’t be able to talk to one another, leaving integrations between different platforms and applications more difficult, if not impossible.

One prominent use of APIs today is B2B SaaS integrations. A company that wants to offer additional features for its consumers can use a third-party’s API to merge its app or data with theirs.  Some banks, for example, use third-party APIs to offer budget and debt tracking and promote these add-ons to attract and retain clients.

These types of APIs provide immense value to organizations by providing flexibility. Companies can add the third-party integrations that suit their current goals, and provide the data needed to view the complete financial picture for the consumer. This allows a company to adapt to trends in shorter time frames without the expense of developing the technology in-house.

Lack of APIs In WealthTech

Despite the immense value of APIs, many wealthtech firms have been slow to adopt them in their strategic roadmap. Re-writing an API can take some time, but it’s better than trying to promote the use of an old API and old code.

Further complicating matters is the plethora of fintech solutions already in existence, as this map by Michael Kitces demonstrates. And despite this saturation, we can still expect new ones to emerge in the future.

Additionally, we’ve seen a recent trend of consolidations in the fintech space, as outlined in IndustryWired’s “Top 10 Fintech Mergers and Acquisitions in 2021” and American Banker’s “11 Fintech M&A Deals That Defined 2020.”

These constant shifts in technology can cause issues with prioritization. Even when a firm has the desire to integrate, it must first wade through myriad offerings and then choose which ones best serve its goals and where it should build out its integrations first.

Why WealthTech Firms Need Sound API Strategies

With so many technologies out there and in use with advisors, client expectations and demands are changing. In order to attract new clients or retain your existing clientele, you need to have the right API strategy to connect where and when they want. The expectation is you will integrate with key elements of their tech stacks like their existing CRM, planning, and reporting tools.

If a tech platform wants to stay relevant, it must create and implement a flexible API strategy to allow its technology to show up in many different places.

Totum’s Integration Advantage

At Totum, we’ve seen RFPs and sales demos lost and won based on the availability and functions of integrations. That’s why our founders spent over five years working to integrate our risk analysis platform and APIs with leading broker-dealers, custodians, asset managers, as well as complimentary fintech partners.

Our open APIs provide the customized experience other fintech platforms and consumers crave. Our portfolio and questionnaire APIs calculate three risk scores based on a customer’s unique life situation.  This is and can be displayed in any financial platform in the industry for an enhanced user experience.

Contact us today to schedule a demo.

Larry Shumbres is the Co-Founder and CRO of Totum by TIFIN

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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Larry Shumbres

Larry Shumbres is Co-Founder and CRO of Totum by TIFIN. Founded in 2015 by FinTech industry veterans, Totum by TIFIN brings a comprehensive understanding of risk to wealth management. Having worked with the largest pension, endowment, and sovereign wealth funds in the world, we observed that the best institutional investors all had a thorough understanding of risk, but most individual investors did not. We began researching why there was a discrepancy and discovered that a risk tolerance tool that accurately calculated personal risk exposure simply did not exist. This led to the inception of Totum by TIFIN.

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