Ariath glossary: API
Short for application programming interface, a standard way for one software system to request data or actions from another, using agreed formats and rules.
In brief
- What it does
- Lets one system request data or actions from another using agreed rules and formats.
- How it differs from file transfer
- An API answers requests when they are made. A file transfer moves data as files, usually on a schedule.
- What it needs in a wealth management firm
- Managed credentials, limited permissions, approved connections, and records of requests.
How it works
How APIs work
An API call generally follows a simple exchange between two systems:
Make a request
One system asks another for something specific, such as a client's list of accounts.
Authenticate and authorize
The receiving system checks the caller's credentials and whether it is allowed to make that request.
Process the request
The receiving system retrieves or changes the data the request describes.
Return a response
The system sends back the data or result in an agreed format, or an error if the request could not be completed.
An API publishes what is available and how to ask for it, so two systems can work together without either exposing its internal design.
An API connection is only as safe as its credentials, its permissions and the monitoring around it.
Comparison
APIs vs. file transfers
Both move data between systems. They differ in timing and in how specific the request is.
File transfer
Moves data as files, often on a schedule such as a daily export. It is simple and widely used, though the data can lag between deliveries.
For example
A data file that arrives from a custodian each morning.
API
Lets one system ask for specific data or actions when it needs them, using agreed rules and formats.
For example
A planning tool retrieving a client's current account list when an advisor opens a plan.
Many firms use both. Which fits depends on how current the data needs to be and what each vendor supports.
In practice
API examples in wealth management
Wealth management firms commonly rely on APIs to connect CRM, custodian and planning platforms so data moves between them without manual re-entry. These examples are illustrative.
CRM and planning
Sharing client details between the CRM and planning software.
Custodian data
Retrieving account and position information from a custodian into other tools.
Document and signature tools
Passing the status of a document or signature request back to the CRM.
Reporting
Feeding data from several systems into reports and dashboards.
AI workflows
Letting an AI workflow retrieve information from connected systems under defined permissions.
What an API exposes depends on the vendor, and access to it is typically controlled with credentials and permissions.
What it needs
What API connections need to work safely
Each connection is a path to firm data. Firms typically put the following around it:
- Managed credentials and keys
- Limited permissions for each connection
- Approved connections only
- Monitoring for errors and unusual activity
- Records of requests
- Named ownership and periodic review
Firms usually review these points as part of vendor due diligence, in line with their own policies.
Common questions
Frequently asked questions about APIs
Is an API the same as an integration?
Not exactly. An API is the interface a system offers. An integration is the connection a firm builds or buys that uses one or more APIs.
Are APIs secure?
Security depends on how an API is built and managed, including how credentials and permissions are handled. Firms usually review this as part of vendor due diligence.
Do all systems offer an API?
No. Availability and scope vary by vendor, and some data is only available through files or manual export.
This entry is educational. It is not legal or compliance advice and does not guarantee regulatory compliance. Confirm the requirements that apply to your firm with your compliance lead or counsel.
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