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Why APIs are Vital for Investment Research Processes

API technology is driving more advanced, cost-effective research capabilities by offering investors simple interfaces and versatile data integration.

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Since their earliest uses in online commerce two decades ago, application programming interfaces (APIs) have become increasingly critical to make different technologies play well together. Their most visible role is as a front-end tool, offering straightforward, easy-to-use interface that lets people perform sophisticated functions involving several applications – typically without needing to know anything about those tasks or applications. APIs also serve as intelligent agents that connect, translate, and augment the info that passes among apps, allowing a blizzard of varied data to move effectively across multiple systems.

The incredible utility of these functions operating within fintech needs no explanation. So it should be no surprise that institutional investors are implementing API strategies as their needs for immediate, sophisticated data processing, and flow continue to increase – eventually straining the limits of even the most robust research management systems (RMS) they depend on to achieve beta and avoid risks. We asked David Li, Chief Technology Officer for Washington University Investment Management Company (WUIMC) to discuss the benefits his firm has realized by implementing an API strategy and to offer insights to institutional investors interested in gaining these advantages.

Institutional Investor: How do you define APIs, and how are they currently affecting the investment management landscape?

David Li: API stands for application programming interface, but the key word is interface. An API provides you with a way to interact with something without having to know what goes on behind the scenes. Think about an ATM; we might as well call it an ATI. You don’t need to know anything that happens in the bank, you just push the buttons and get your money.

APIs are the same kind of thing, but for applications. You don’t need to know a single line of code in the application you’re interacting with; you just need to know how to use the interface. And if you think about this on a massive scale, it significantly changes and simplifies the way that we think about software. APIs are driving the democratization of software development.

For investment management companies, this means you move data and research and act upon it very quickly – with a gradually decreasing amount of effort and, usually, cost. You don’t need to wait for your custodian to send you a CSV file and then ask your analyst to build pivot tables and pie charts on it. That world doesn’t need to exist anymore. And this is changing the way investment managers think about what information is available to them in their day-to-day operations.


What trends are you seeing with APIs in the investment world?

Investment offices that already had some tech resources are actively embracing APIs now. And we’re seeing many more offices thinking about tech development in terms of integrations with APIs, rather than the traditional process of building their own software. These more advanced offices are really seeing benefits from APIs in terms of managing their stacks and software behaviors more easily – and of course seizing more opportunities by having faster, easier access to data and investment research.

Other investment offices still live in the world of CSVs and Excel spreadsheets. They’re slower to adopt APIs because their mindset doesn’t embrace change.

Are the costs of transitioning to APIs also a barrier?

Many institutional investors are limited in making changes by their basis points, certainly. But one beautiful thing about modern API sophistication is it empowers you to do more interesting things with fewer development resources. And this means APIs are increasingly being viewed as an innovation that drives costs down, rather than a technology expense.

More investment offices are realizing that they don’t have to suffer through the constellation of 20 Excel files and the increased risk, cost, and time it takes to get to insights that this old approach causes. More offices are realizing they can stop using generic monolithic software applications that don’t fit their needs. They are increasingly free to think about best-of-breed solutions that handle specific needs with superior technology. And they are realizing that API-driven development can lessen or eliminate the severe limitations their people face and make their organizations more effective.

So you’re seeing API adoption growing rapidly among institutional investors…

Yes, definitely. The modern world relies on APIs, whether you know it or not. Your firm already relies on them. It’s just a question of whether you’re going to further leverage APIs to do more for you, and to perform operations that are specific to your business’ needs, mindset, and philosophy. Today, I don’t think there’s any kind of investment firm that couldn’t leverage APIs to implement more effective solutions for their specific business needs.

When did your organization begin to take advantage of APIs?

I joined WUIMC as Chief Technology Officer in 2018. After our new CIO had joined in late 2017, we embarked on a process of revitalizing the tech stack. APIs were at the heart of those plans. We migrated from a single monolith system that did everything – RMS, CRM (customer relationship management), IBOR (investment book of record), DMS (document management system)…everything, all on one platform. It was convenient, but everyone ended up equally dissatisfied. All monolithic systems are like that.

We wanted to give our team a streamlined, modernized, user-friendly experience for performing and viewing investment research, so we replaced our monolithic platform with a best-of-breed approach that uses the best individual application for each function. But this brought fragmentation, because then people had to use multiple systems. This made APIs invaluable because they provided a common entry point into each application and allowed integrations. For instance, we chose Bipsync as our RMS, and its API was essential for giving our users a combined research and analytics experience that they couldn’t get before.


Why did you choose Bipsync for your RMS needs?

Choosing Bipsync for our RMS was really the first step in our API strategy. Research is at the core of everything we do, and we chose Bipsync for many reasons. For one, they provide an excellent user experience and a highly intuitive interface, and for another reason, they have an excellent API that we were able to leverage to extend the application beyond its default behaviors and capabilities.

From a technology perspective, Bipsync is a cloud-first solution with excellent technical infrastructure, and that was essential for us. It allows superior metadata management and makes managing objects easy. And maybe most importantly for our end users, their iOS mobile app is superb.

Our journey through the API world is not complete, but we rely on APIs to move data seamlessly between systems. Such technologies from Bipsync, and other providers such as Solovis and Snowflake, allow our investment team to move, process, and manage data in vital ways. And it can alert our people when asset allocation exceeds a certain boundary, or when liquidity gets below a certain level, or when there’s a large cash flow…and this lets us get extremely specific about what KPIs we care about and push to the users.

Has the upgrade to API solutions given your organization any wholly new capabilities?

Definitely. A big one for us is delivering interactive analytics that our people can update on a split-second basis, so they can explore their ideas while staying in the flow. They no longer have to rerun a report and wait for the results every time they want to drill in on something.

Another new capability has been on the mobile side. I already mentioned the Bipsync iOS app; we use that extensively. Our team can get updated returns and receive alerts on their iPhones at any moment. Before, getting updated info required opening your laptop, connecting to the internet, using a web portal…all that takes too long in many situations. Having this mobile access, essentially expanding the ways that we can consume the research, has been huge for us.

And there’s a lot of opportunities that we haven’t touched yet. My dream is to provide a two-way chat using natural language processing, so that someone could ask, “What’s the NAV of this fund?” and receive an answer. We don’t have this capability yet, but that’s the kind of innovation we’re thinking about in terms of how APIs could empower us.

What advice would you give to institutional investors who want to begin the API journey?

Choosing a technology consultant to help you implement an API strategy is one of the most common ways to begin. If you decide to hire a consultant, of course you want one that has successful clients, especially if they’re peers of your organization.

Secondly, and more importantly, when it comes to choosing an SaaS vendor that will provide your RMS solution, only consider those that have mature APIs built on modern standards (such as REST and GraphQL). Whatever your needs are, vendors with mature APIs have probably already built their APIs with many of the same needs in mind. You can benefit from the many iterations based on other clients’ needs.

You could ask, “For the cohort of clients that are similar to my organization, can I look at what’s been done and use the work that’s already created to get insights for our needs?” A good RMS solution with robust API support will help you with this. For example, Bipsync is an API leader in the best-of-breed world and has built thousands of APIs for countless functions, and having access to this kind of breadth and depth of experience can point you to the best solutions already in use.

In general, I would advise investors to start small with APIs. Start with a need that’s well-defined and narrow. For example, pick some data that you want to get from one system and put into another, and see if your integration can be covered by a no-code or low-code platform like Zapier or Microsoft Power Automate. If not, start experimenting with simple tools like Postman or HTTPie. Dip your toes in the water and see what you get. Critically, do not sign up for any long-term contracts or pay for a bulky API platform you might not use. Don’t get ahead of yourself. Just start small. Start with something where you can pay as you go. Again, the right SaaS vendor will be happy to help you start small and progress intelligently and cost-effectively from there.

How important is maintaining an ongoing relationship with the RMS provider?

It can be critical. Not just for technical support, but also for long-term development in your data and research needs. A provider such as Bipsync, for example, will remain highly aware of your use cases – and they’ll always be building the next stage API with those needs in mind. That’s important for the longevity of your API solutions when it comes to the ability to meet, and even anticipate, your evolving needs in getting vital information to your people and clients when they need it.

Get in touch to learn more about API solutions for investment research.