Written by: Brandon Whittington | ProTrustee

Over the past decade, cloud technology and APIs have radically transformed business across multiple industries, allowing companies to implement easy-to-use software applications without complex and costly IT infrastructure. 

But while entertainment, ecommerce and other industries have been eager to modify their businesses to fit the software-as-a-service model, the financial industry has been far slower to modernize their companies using cloud-based technology. The trust business, in particular, has unique challenges as a result of limited technology options.

The good news is that there are signs that this is beginning to change, thanks to API-driven innovations, new technology solutions based on trust administration expertise, and open architecture.  

A Growing Movement

The cloud has been a great first step. According to a 2022 McKinsey survey, among financial services leaders, only 13% had half or more of their IT footprint in the cloud. However, more than half of those surveyed—54%—said they expect to shift at least half of their workloads to the cloud over the next five years. 

The trust industry has been known to lag trading and advisory platforms in the financial services sector. From small to even some of the largest-sized independent trust companies and bank trust departments, these entities have generally employed older, less flexible systems that don’t adapt —so much so that as a result, many of the operational functions require manual processes for key fiduciary activities presenting data and human errors. Too much time is spent on day-to-day administration and data reconciliation, at the expense of fiduciary compliance and revenue-generating activities.

Better Integration

One reason why it’s becoming a lot easier to implement these technological changes is because API technology offers a bridge from older tech to newer, open systems based on trust domain expertise.

For example, my company ProTrustee, requires a three-pronged setup that allows our system to communicate with both the trust accounting system and custodian. Just a few years ago, this whole process would have required setting up separate data connections between the accounting system and custodian, costing significant time and requiring dedicated resources to manage the data infrastructure. But now, we have partnered with fintech firm, BridgeFT, which provides the industry’s only API-first software and data aggregation platform, to connect financial institutions and multi-custodians in a modern WealthTech-as-a-Service model. Not only is the setup faster and more affordable, but it makes it much easier to forge relationships if our clients know that we can quickly and easily pull in critical data sources to our fiduciary workflow and compliance tool rather than having to do one-off integrations, which can take months to complete. Partnerships like this are a game-changer for financial startups like ourselves. We have a vision to collaboratively improve productivity and lower compliance costs while maximizing effectiveness for the industry. Innovations in cloud-native, API-first technology allow us to actually bring that vision to the market in a fraction of the time and cost we would have had if we had to build individual custodian connections ourselves or work with a traditional account aggregator.