Tradier: Building a Business on an API-first Strategy
Tradier is a financial services cloud provider that offers a set of fully hosted APIs, modules, and out-of-the-box tools that enable platform providers, financial services firms, third party developers, and investors to rapidly create customized trading experiences, real-time portfolios, and executions.
Challenges and Opportunities
Tradier has built its business on an API-first strategy. The company focuses on creating capabilities for its business partners and customers through APIs, which in turn enables innovation for Tradier’s partners and customers.
“Finance is not necessarily known as a hotbed for technology innovation—a lot of the technology and players are well-entrenched,” said Steve Agalloco, Tradier co-founder and vice president of engineering. “We are able to be disruptive in the space.”
While many financial institutions are slowly embracing digital and APIs as core to their business, Jason Barry, Tradier co-founder and vice president of technology, says that Tradier doesn’t have the same issues that plague many older companies where APIs need to be ‘convinced’ into the business strategy. “API is our business strategy,” said Barry.
To accelerate its disruptive capabilities and deliver its own industry-leading brokerage platform, Tradier needed an experienced API and data-driven partner that could provide thought leadership and a technology platform to enable Tradier to quickly go to market.
Tradier’s requirements for an API management vendor included:
- Tight security for financial transactions
- The ability to handle real-time data
- Ease of integration
- High scalability for anticipated growth
Tradier chose the Apigee Edge digital business platform because it met these requirements and because of the ease with which Tradier could manage the complete API development and integration lifecycles.
Tradier runs all of its APIs through Apigee Edge, augments its APIs with rate limiting and OAuth for authentication, and leverages Edge to power its own brokerage platform capabilities like trading, real-time market data, analytics, and investor identity. Tradier has a strong philosophy of innovation both internally and externally with partners and developers. Using Edge, the company can extend the brokerage platform capabilities to other platform providers, external developers, and individual investors.
Tradier uses Edge Analytics Services to track key metrics like market data requests, trades, and orders placed through the APIs, and the company extends these same analytic capabilities as a service to partners and customers.
Tradier uses Edge Analytics Services for both business and operational needs: to assess the needs of its partners; changes to its APIs; and to understand whether or not the API team can make changes to its APIs in a given period of time.
“Not having to have built any of that, to have just built the APIs on top of Apigee and to have all of the analytics come with it is tremendous. Without a shadow of a doubt the analytics provided in the Apigee platform create a ton of value for our organization, both internally as well as for our partners and customers.”, said Barry
Accelerated time to market and partner onboarding
Tradier estimates that it accelerated the launch of its brokerage APIs and platform by several months by avoiding having to build its own analytics, authentication, and rate limiting capabilities and by using Apigee Edge to configure policies.
Since launching the platform, Tradier has seamlessly onboarded 12 new partners, with onboarding times from 30 to 60 days for API-driven capabilities. Tradier’s partners have indicated that this integration is three to nine times faster than similar integrations with other platform providers due to the simplicity of the Tradier APIs, which Apigee worked with Tradier to design. Tradier prides itself on operating easy-to-use APIs and has received only one or two support tickets per customer. Because of this,
the company has more time to focus on enhancing its products and developing customer relationships.
Honeypot Effect: Developer/partner attraction and product stickiness
By breaking down its product into functional API building blocks of discrete brokerage capabilities, Tradier can offer capabilities à la carte and attract developers and partners with varying needs. A partner often starts by integrating a single API, such as a trading or market data API, and once the business has success offering this capability to its own customers, the partner often incrementally integrates new Tradier APIs and capabilities with the goal of providing a full investing experience for its customers within its own application.
The value of integrating each capability along with the ease with which partners can add new functionality to their applications creates a “sticky” product for Tradier. For example, 25 percent of partners who started with a singular integration purpose have subsequently launched with more functionality than they had planned.
Revenue generation and brand credibility
Tradier drives revenue through trades made against its systems, whether from investors trading directly through their brokerage platform or through a partner platform whose trading capability is powered by Tradier’s trading API.
Tradier also derives value—by building credibility and trust—from its brand investors who access non-trading capabilities like real-time market data either directly through Tradier or indirectly through a partner provider.
Each new partner and third-party developer extends Tradier’s reach to a broad set of investors. A “brand halo” is created through consumers whose investing experiences are aided by Tradier either directly or indirectly through partner platforms and applications.
Just as important to Tradier as the revenue-driving trades, the community of providers and investors builds a robust ecosystem and ensures that consumers feel secure investing and making investment decisions through Tradier.
Because Tradier offers its brokerage platform APIs not only to business partners (including other platform providers and financial institutions, for example), but also to the retail investors who trade independently through Tradier, individual investors can customize their investing experience.
The company was surprised to find that there exists a significant segment of technically-inclined investors who make trades directly through the API rather than using Tradier’s web interface. Furthermore, some of these “developer-investors” tinker with the APIs and build their own brokerage experiences using the trading and market data, as well as other Tradier APIs.
Tradier helps develop and publish these new applications, and in return receives valuable API and product feedback. Tradier focuses on developing its core API platform,
while supporting and harnessing the external innovation to create a competitive ecosystem for applications.
“At the end of the day,” said Barry, “Apple proved to us with the app store that we all want choice in the way that we do things. We strive to create choice and an ecosystem for our investors. So the more apps and the more innovation, the further along we are in our goal of creating a competitive ecosystem for choice.”
- Extent customer reach - through partner providers and developers
- Increase brand credibility - through adoption of APIs and services among platform providers, developers, and investors
- Generate revenue - through trades placed directly through Tradier and platform providers and developer apps integrating Tradier’s trading API
- Create an ecosystem of choice - for investors through external developer innovation
- Apigee Edge digital business platform manages complete API development and integration lifecycle
- Edge provides rate limiting and OAuth- for authentication
- Edge Analytics Services enable internal tracking and can be offered as a service to partners and customers