The inherent transparency of open API may seem an uneasy fit for an industry as opaque as the banking sector, but this openness was one of the most compelling attractions of the interface for Saxo Bank's new trading platform.
Launched last year, SaxoTraderGo - which was built on an open API - has transformed how the company does business.
“We could take on third-party developers and company fostered [ones], and we could even take on third-parties to make completely separate custom apps,” Saxo Bank CTO Michel André told Computerworld UK at the GOTO Accelerate Business Conference in November.
“We can make more applications; we can allow white-labels to seamlessly embed Saxo functionality into their own banking portals or trading portals."
An API is an application programming interface for developers that functions as a contract governing how different programmes can interact with a piece of software. Making APIs open gives developers free access to use them to build innovative applications, which is why they’re also known as public APIs.
Benefits and use cases of open API
Saxo Bank is a global online investment bank that serves both direct clients and those of white-label partners, which use it as a trading service provider.
It serves around 50,000 users logged in at any point in time, and processes roughly 400,000 price updates per second, which require rapid reactions of sometimes sub-millisecond speeds. Transaction peaks can hit around 2,000 to 3,000 trades per second.
Online trading platforms have been central to the bank's operating model since it was founded it 1992.
“We brand this to other banks so they can take our platform in the cloud in a business as service manner,” André said.
SaxoTraderGo platform is the latest incarnation of such a platform. It was launched in May 2015 with the aim of letting clients trade and invest anything at any time across any device. The open API that provides its foundation supports a rich application with chart creation capabilities and offers functionality across the trade cycle.
“Within a year it actually stands for 60 percent of our business,” says André. “We haven't seen that quick uptake on any platform before.”
Later that year, Saxo launched the open API to support a customised trading experience through access to its infrastructure. Enhanced interoperability was one the most appealing attractions of the strategy. Clients can be given permission to do simple trading or they can migrate everything into Saxo’s platform.
Giving third-party developers access to Saxo’s open API lets them create features and products when the bank doesn't have the time or resources. For example, clients can now rebalance portfolios in Excel through the open API in the same channel as the trading platform just by using a plug-in.
Updata - which sells its own trade analytics software - is using the technology for sophisticated charting and detecting trading patterns, and a Chinese company has built their own complete separate trading platform on top of the open API. Specialised options trading platforms have been developed where strategies can be defined and options on Saxo Bank traded.
If constraints are placed on the API they’re essentially the same as in the UI. Pricing of the data may vary by intended usage and compliance when the identity of the clients, and the provider of the application support aren’t always clear can be complex.
“Throttling and business protection is needed on the enterprise, because the APIs get abused, misunderstood, and misused both by accident and on intent,” says André. “Most of the requests go through the open API, but in some way, shape, or form hit your back-end systems.”
Open APIs, he concludes, can help businesses become more digital and support agility, deep integration and innovation. It can let a company transform its business model and develop new platforms and commercial opportunities.
“APIs benefit both your IT development and business development. Make sure to make a chart that appeals to both sides,” he suggests. “In our case, latency and frequent requirements have guided us to an off-scale implementation.”
The benefits for Saxo have been striking. More than 55 percent of total revenue from private clients is generated from trades on SaxoTraderGO, the bank’s most popular platform across all client segments.
“They want more,” says André of his colleagues. “Not just more. It's more features, it's more things like that.”
Saxo Bank's digital model
Saxo Banks' unified open API evolved from an attempt to simplify the architecture standard to produce a common set of services from numerous front-end UIs and services in the back-end. Expenditure and troubleshooting were both expected to benefit from the single interface that would replace the old system.
The real spark for the inception of the open API was the creation of TradingFloor, a social platform for investors to share trading and portfolios.
“[We] wanted to build the next generation trading platform called SaxoTraderGO with a unified user experience, look and feel, across all devices from phones to tablets,” says André.
“As part of building that platform, it made a lot of sense to have that platform speak to the open API.
“The key lesson here is we got new real business-driven opportunities to introduce this open API — not a pure technology play — and that made it obviously a lot easier.”
Central drivers behind the move included speed, mobility and increased access to data; “share and conquer”, as André puts it. The platform was designed to be scalable, stable, secure and flexible.
Open API and trading platform functions
Foremost priorities for the trading platform were a slick user experience and ensuring low latency despite the immense number of events requiring immediate responses. Saxo chose HTML5 as the core technology for all the displays under the belief that optimisation would benefit from developers using a single language.
A centralised screening service reads the architecture, which is accessed entirely through a message bus. Users see a snapshot when they load the page and screening updates on whatever they request.
“You only need to have one connection, and all these service groups can reach out and push data to you,” says André.
“Speed has been important for us, and that might stand in contrast with making a pure, simple, normal interface and end-user application experience. Balancing all of these three has been driving a lot of the delivery decisions.”
The application includes a range of data that could be found in other places, such as trading details, currency, format and description.
Saxo was founded almost 25 years ago with a digital business model as its core, a strong foundation for a long-term strategy requiring executive support. The API was inevitably complex as it serves Saxo’s UI and needs to have all its functionality.
“It's not an API for machines,” André explains. “It's an API to be able to build UI platforms.”
A flexible security model was also essential to ensure widespread use of the API while retaining a degree of control. The end-user and their login credentials, the application the end-user is accessing, and whether that’s a Saxo or a third-party application all need to be accounted for.
Saxo’s developers used a single sign-on and third record sign-on with certificates to seamlessly transfer the session for a banking portal to the application. Application authorisation determines individual usage rights.
In the canteen of Saxo Bank's Copenhagen headquarters workers dine in the formidable shadow of a life-sized Tyrannosaurus rex skeleton. The overhanging bones are a constant reminder of the ominous warning to the financial sector that Bill Gates delivered two decades ago.
“Banks are dinosaurs," he told Newsweek in 1994. "We can bypass them."
The developers who dine beneath him are thankfully far more forward-thinking than their Jurassic colleague. Saxo Bank's successful adoption of open APIs has helped it not only survive extinction, but evolve to succeed in a digital future.