The Truth Behind API’s (Application Programming Interfaces) The greatest excuse in FinTech

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Estate Planning Technology

We have all heard the term, “API” and some of us actually know what the acronym stands for.  It is a term that every professional learns when using technology.  API’s are supposed to make everyone’s life easy, moving data from one system to another with the click of a button.  When everything works perfectly, it is one of the most beautiful aspects of technology. An API does two things: provide a set of operations, which are defined by certain inputs and outputs, and provides these operations by allowing implementation without compromising usability.

Developed with the intention to make everyone’s life easier, it somehow also created headaches among users every day. Personally, as a financial advisor, I encountered all kinds of trouble when interfacing data between platforms.  I couldn’t wrap my head around how a great concept could be so difficult to execute.  It was baffling to me why the tech vendors couldn’t this right.  I have cancelled subscriptions to platforms that were perfectly fine, but I couldn’t get the API integration to work right.  Unfortunately, it can become the center of the technology we use and overshadows some of the best platforms on the market.

Then one day, I woke up with the idea to create my own technology.  I have been a financial advisor for 18 years.  I saw a need in the industry and took a shot at building a solution.  That solution, Yourefolio, has morphed into a complete estate and legacy planning technology for both advisors and estate planning attorneys. I had no idea how to program but I was about to get a crash course in Fintech and everything that comes with it. It also gave me an inside look into the technology we use and the wonderful world of API’s.

After reading a few Twitter threads this past week, one particularly complaining about the API of one of the largest financial planning softwares in the industry, I felt compelled to write about the truth of API’s.  I have the experience and could offer some of the best insight into API’s and what the technology vendors don’t tell you. While some of the tech vendors may find irritation in some of the information I am sharing, users deserve to understand the truth.

API integrations that work are great.  We have some great integrations that pull in a lot of information and can be effective when planning.  I am sure this is the way for other vendors as well.  It isn’t always bad, as compatible systems and properly developed API’s can be a real benefit for the advisor.

It is important to remember that old cliché “it takes two to tango” is significant in API integrations.  Platforms are built in a variety of ways using different programming language.  Because of this, it could take a tremendous amount of effort to build an API integration between systems.  This is not an excuse; it is just the reality.  It means time, labor, and programming effort which makes a tech vendor wonder if the integration is worth the one or two users that it affects.  It comes down to expense, effort and benefits for the vendor.

Some platforms don’t want to play in the sandbox with others.  This happens for many reasons but primarily because the opportunity isn’t the same.  Good or bad, respect it or not, well established platforms don’t always see an integration with another platform as worth their time.  Users can request the integration but unless it is a significant amount, there is no priority.  Therefore, it creates a challenge for the advisor and something to consider when choosing where to place all your client information that you eventually want to move somewhere else.

There are too many options to make this all work perfectly.  Yes, there is a new technology coming out every day.  That is just one more system to integrate with.  If tech vendors integrated with every technology, they couldn’t get anything else done.  We place our API on our website for others to pull from but in the same manner, we do not have the time or resources to pull in everyone else’s information.  Even if we had teams that focused on API integrations, we still would never be able to integrate with everyone.

API’s are not a priority.  Yes, you heard it from me, they are not a priority.  Tech vendors are focused on providing innovation.  That may be a module or release that does something that another tech vendor does not. There is a lot of competition, so technology vendors are looking for ways to differentiate themselves.  It is all about distribution for Fintech vendors. We are here to solve a planning problem; API integrations don’t solve problems, nor do they provide a direct benefit to your clients.  If we can make your service offering better or solve a planning issue, that sells software. No one ever bought a software because it merely integrated with something, it has to solve a problem or provide a benefit.

Most tech vendors look at API integrations as a chance to market to their userbase.  While one tech vendor may complement another’s offering, most of the time it is seen as a marketing opportunity.  The actual integration does nothing for the platform.  Considering that there are so many offerings to advisors, is an integration with a custodian really going to make the platform better?  However, those who clear through that custodian are a marketing opportunity for the tech vendor.

Technology is finicky. A bad line of code can cause all kinds of issues.  If that line of code breaks in someone’s platform or is updated, then it can cause the API integration to break.  The challenge is, the particular vendor may not become aware of it until a user informs them.  Then, the staff has to find out what happened, make the change and notify all the vendors that they need to make an adjustment.  This takes time and could happen at the most inappropriate time.  These types of issues happen more than you think.

I am just going to say it, API integrations are overrated.  Yes, there you go.  They are the perfect excuse.  As much as advisors don’t want to admit it (and yes, I am guilty), we like to find fault.  A platform could be 95% perfect, but I find the one thing that is wrong and focus on that.  API integrations are the perfect blame.  It was in the tweet and we here it all the time, “They don’t work half the time; they don’t bring over any valuable information and the platforms we like to use don’t communicate.”  Could you imaging telling your client, “I found a great tax planning software but because it doesn’t have an API integration with my other systems, I am not going to use it for your benefit.” The reality is, it isn’t going to get any better because there are too many variables.

If you like a technology platform, use it for the benefits that it brings to you and your clients.  Don’t pass on it because of an API integration.  It is just an excuse.  If you can get a technology platform that has an API integration with another platform you use (and it works) consider it a bonus. Your technology should differentiate you and your service offering.  Don’t make API integrations your reason for not using a perfectly good platform, you’re only hurting yourself.