pershing custodian technology

Custody As A Service: How Pershing Is Going All In on API-Based Data Strategy

“While all the data we have is about the past, all the decisions we make are about the future.”
― Alex Hagan, Founder and CEO, Kienco

A comprehensive data strategy is a key component of every successful firm. If your firm doesn’t have one, you’re not alone!  In a recent survey, 87% of respondents said their company lacked a clear, repeatable process for data projects. There’s tremendous risk implied here since data is at the core of every wealth management system and the evidence shows that most firms aren’t managing their data assets very well.

We been running producing a series of webinars to bring leading industry experts in data strategy, data architecture and systems implementation to share their experiences and best practices around leverage Data-as-an-Asset for enterprise wealth management firms.

Our most recent webinar, called The Data Engines Powering Wealth Management, included panelist Kit Lee, Director, Head of Integration, Pershing, who shared some of Pershing’s plans for opening access to their internal data sources as well as some of her experiences working with vendors and partners to connect to and consume their data.

In case you missed our second webinar, click here to unlock your access to the full recording.

Integration Portal Provides Better Access to Custodian Data

“Implementing code to connect to Pershing custodian APIs took 6-9 months for digital advice providers, the new NetX Services Integration Portal will provide transparency & reduce integration costs”

— Kit Lee

As a former programmer, I’m quite familiar with the term Application Programming Interface (API). But while I was searching around for a layman’s definition to include here, I realized that nobody has been able to come up with one! Even IBM’s definition is a little too technical and makes assumptions about the reader’s knowledge.

So I decided to combine a few definitions to create my own:

  • An API is a set of computer functions that allow external parties to access data and interact with software components in a secure and controlled manner. 

To simplify, an API receives a request from an external user, passes the request to a system and thens sends the system’s response back to a user.  APIs simplify software development by enabling applications to exchange data and functionality with external parties without requiring intervention from the organization’s staff. (See AI-Powered Custodians as The Ultimate Digital Assistant)

APIs enable companies or organizations to open up their data and system functionality to external third-party developers and business partners as well internal departments.

One of the main benefits of an API is that the external developers don’t need to know how it is implemented. They only need to know the syntax of the inputs and outputs to communicate with the target services. API use has surged over the past decade, to the extent that most popular web applications today would not be possible without APIs.

In a textbook-perfect world, using APIs to build an application would be a simple three-step process (as told by Christopher Scaffidi, Ph.D. in Software Engineering from Carnegie Mellon University):

  1. Gather requirements from clients and other stakeholders
  2. Map requirements to API components and functions
  3. Type in “glue code” to combine the APIs’ functionality into the required application

Unfortunately, real software development with APIs is not so simple, since programmers experience significant challenges when using APIs for many categories of functionality: networking, databases, web applications, web services, graphics, user interfaces, text processing, and so forth.

What Kit Lee was referring to was that just having a set of APIs is not enough. They also need to be well-written and tested so there are few to no bugs and well-documented with lots of sample code, so the developers can copy and paste most of what they need. A survey from McKinsey found that building a library of standardized APIs can reduce traditional product development IT costs by 41% and lead to a 12-fold increase in new releases.

This is the promise of the NetXServices Integration Portal, which is promoted by Pershing as offering multiple levels of integration and an array of options, including not only APIs, but connectivity to the Society for Worldwide Interbank Financial Telecommunication (SWIFT), Financial Information eXchange (FIX), Single Sign-On (SSO), and Standard Custodial Files.

Jud Mackrill, co-founder & CEO of Milemarker, who was also a panelist, agreed that all advisortech software vendors should invest in developing an API-first infrastructure to enable their clients to customize their client experience.  We’re seeing increased demand from wealth management firms for their vendors to provide their data and services via APIs where they can be seamlessly plugged into front-end systems that are being internally developed.

Advisortech vendors would be wise to adopt an API-First mindset so as to be prepared when clients request programmatic access to their core applications.

Real-Time Custodial APIs

The beginning of the end of batch processing: clients can now subscribe to Pershing APIs that provide some custodial data in realtime so they update their systems intra-day.

— Kit Lee

pershing custodian technology

The NetXServices portal, part of the BNY Mellon Marketplace, is a rebranding of their first integration portal that was announced back in 2016. It is supposed to provide clients and third-party providers with greater levels of transparency when they consume and integrate with Pershing solutions, according to Lee.

The portal offers a convenient way to tap into Pershing’s full suite of capabilities, including their account opening capabilities supporting more than 100 account registration types, real-time trading and order management, real-time portfolio holdings and balances, and execution across a variety of asset classes, Lee claimed.

Some of the reference content in the portal includes detailed instructions on how to leverage their files or APIs, how to leverage snippets of code in different projects, single sign on, and enabling firms to understand and have transparency into what a custodian like Pershing can offer, Lee explained,

Pershing reports that they currently integrate with over 200 third-party providers.

TD Ameritrade was previously considered a leader in open architecture and supporting advisors with integrations between custodial data and third-party applications through their Veo platform.  Since the acquisition by Charles Schwab, no one is sure what direction they will go with the TD technology.  Pershing is smart, in my opinion, to build out their capabilities in APIs to make their services more attractive to RIAs who might be unhappy with the switch to Schwab.

Although Pershing is playing catch-up to Fidelity, which launched their own API Portal back in 2018.

“Demand for integrations with our platform has increased three-fold over the past year,” said Lee. “The NetXServices portal is part of our multi-year investment in integration and will become a critical hub for firms looking for easy access to our capabilities and data.” (See Technology is the Front Door for Advisors to Work with Custodians with Lauren Wilkinson)

Getting the Right People on the Data Project Bus

Data Strategy Tip: Getting the right partners across the organization before starting increases the probability of success for data-driven projects

— Kit Lee

Lee shared some of her experiences with clients that did not bring in the right partners when they implemented a centralized data strategy.  Transparency and integration support should be two of the highest priority items for broker-dealers or RIAs when evaluating potential partners that can best support their efforts.

A recent study by InvestmentNews found that:

Regardless of size or profitability, advisory firms continue to struggle with a lack of integration between their technology tools, as well as a shortage in automation. These two issues are correlated: automated workflows require seamless flow of accurate data, which is impossible without deep integrations across the tech stack.

Firms that can manage to deploy this level of integration between different vendors and data providers will be providing a better experience to their advisors, Lee noted. There will also be less work for partners and clients to do to take advantage of the advanced features available from the platform. 

In 2019, Pershing setup an integration advisory council made up of 15 third-party providers who represent some of the most important parts of the advisor value chain, to identify new integration opportunities and enhance the experience on its platform, Lee explained.

Pershing is working closely with the council to develop an integration maturity and certification methodology that could become an industry standard. It would be used when assessing vendor’s current level of integration maturity and could help clients increase their confidence when evaluating integration partners.

Know Where Your Data Master Resides

Successful Digital Transformation projects require a sound data strategy to know where master copy of data resides, how to synchronize and avoid conflicts

— Kit Lee

In April, Pershing announced they were realigning their business to adjust to changing market conditions dividing the firm into Wealth Solutions focusing on RIAs (formerly Pershing Advisor Services) and Institutional Solutions focusing on institutional-oriented broker-dealers, investment banks, hedge funds and alternative investment managers.

With over 700 broker-dealer clients, Pershing is the leading custodian in the institutional space and has extensive experience working with the largest firms in the industry to integrate custodial data into technology projects and platforms.

Lee recommended that firms bring in a technical architect as early as possible during digital transformation projects.  This resource can help the team decide how to handle multiple data domains and also understand which party that holds data is the strongest. This could be a vendor, it could be the firm or it could be a custodian.

Bringing all of these parties together at the beginning and then agreeing on what to do with the data is one key to success, Lee noted.  Having all the involved parties together reduces the time spent struggling to agree on a data strategy and hunting for the data needed to deliver the digital transformation.

The most successful firms realize that they will need to change people, processes and their thinking as well, Lee reported and are prepared for it.

In case you missed our second webinar, click here to unlock your access to the full recording.




The Wealth Tech Today blog is published by Craig Iskowitz, founder and CEO of Ezra Group, a boutique consulting firm that caters to banks, broker-dealers, RIA’s, asset managers and the leading vendors in the surrounding #fintech space. He can be reached at