Unbundlings: Disrupting the Disruptors – Part 2

This is part 2 of our 3-part series on “unbundlings”. Read Part 1 here.

You Get an API and You Get an API. Everybody Gets an API.

Picture this: You’re a consumer. At your fingertips you can view rebalancing, set it and forget it, algorithmic products, monitoring, alerts, coverage calls, portfolio analysis, performance, fractional buying and other products—all via your favorite apps. That’s the world we’re headed towards. Already you see companies like Wells Fargo have a “Gateway” of plug & play APIs, and BlackRock offering their own “hackathon”. Both inviting developers to have “financial data sets at your fingertips”. Keeping your products closed is the quickest way to close your doors.

     

Use What You Have

In reality, most investment firms have the products and tools to do what the FinTech companies are doing, they just need to be re-packaged and exposed. BlackRock, the world’s largest Asset Manager, added more assets in the last quarter than the entire FinTech space has under total assets. BlackRock also has a powerful set of APIs that could easily be distributed onto a retail platform like StockTracker to allow their users to rebalance or set up an auto-algorithmic portfolio tool and allow them to pick any broker-dealer. It’s only a matter of time before this happens…and it will.  

Prepare for the Outcome

  • Ensure you have an API for each tool that you view as high value on your platform, such as rebalancing, auto-investing, sweeps, funding, etc.  
  • Spend less time worrying about building a Robo to compete with Wealthfront and spend more time putting your Robo into an SDK that can be put in front of consumers where they want it.
  • Partner with Asset Managers to understand the tools at their disposal to grow assets and understand their differentiators (e.g., are they a low cost provider like Vanguard or wed to an advisor network with the associated costs?).
  • Build an API Storefront of the high value items that your company believes will drive your business forward.
    • If your company’s primary goal is AUM, expose an account transfer and account funding API
    • If your company makes 40% from options, expose your Options API

Don’t expect the customers to come to you—put your best product(s) in front of them without friction.

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