API Economy and Overcoming Entrenched Legacy Systems

​In 2015, the API Economy emerged as a prominent talking point for fostering new innovation in financial services and particularly as an efficient way of piloting new approaches and models. APIs are commonplace across various sectors and industries, however, why is their importance so significant as it comes to financial services?

Turns out, there are several reasons. Ranging from specialization in the financial service market, deployment speed of new models compared to existing industry standards, access to information from existing sources such as stock exchanges. However, one significant factor that is specific to financial services is the inherent complexity and crucial nature of existing technology and financial back offices already in place.
 
To take a step back, its important to frame the conversation leading up to existing technology systems in use. Until the 1970’s, the majority of financial services back office tasks were handled by desk clerks with primitive tools comparable to pen and paper. Pioneers such as Sandy Weill led the centralization of the efficient back office, which through the consolidation and growth of Shearson Loeb Rhodes throughout the 70’s spread out through as an industry best practice utilizing technology.