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Inching towards an investing app store

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Service and product providers in the financial field have always lamented how hard it was to reach investors.

Sure, we could market to the investing public in a large, splashy way but it would be so awesome if we could just do a deal with the online brokers and offer our services through an investment account login…

I know this sentiment well.  When I was running business development at Seeking Alpha a few years back, it was so clear that the best/easiest/cheapest way to reach investors with our content was directly through the likes of E*Trade ($ETFC), Schwab ($SCHW), and TDAmeritrade ($AMTD).

This hasn’t been completely lost on the incumbent online brokers (but boy, do they move slowly!).  I’ve riffed previously on how everything is moving towards the creation of investment app stores.  Much like Apple’s famed AppStore, 3rd party service providers would be able to develop their services and products for delivery through the brokerage platform.  TDAmeritrade has a short, but growing  list of providers who are currently doing this here.

The investment app store concept is huge and extremely valuable for everyone in the value chain:

  • Investors: Online brokerage clients no longer have to wait for the walled-garden brokers to develop their own tools and services.  Brokerages are notoriously slow in rolling out new functionality or they typically acquire it (a-la TDAmeritrade’s purchase of ThinkorSwim).
  • Brokers: No need to swell the ranks of the product dev teams.  Now, they just have to manage the API and partnerships and they get a new revenue stream.  Sweet.
  • 3rd party solutions: Wham, investment newsletters, black box trading strategies, content aggregators and others have just been invited to the party.  You can know actually technically reach the end user investor.  Don’t expect the brokerages to promote you though 🙂

So, just like the tit-for-tat we’ve witnessed for years, we shouldn’t be surprised to see that E*Trade just announced the introduction of its API and partnerships with three external firms.

“Open API presents a world of opportunity to customers looking for a more customized investing experience and to software developers looking to create the next great investing app,” said Michael Curcio, President, E*TRADE Securities. “Our main objective is to facilitate innovation and ideas that empower customers — ultimately creating a richer investing experience.”

Source: E*Trade Bolsters Trading Innovation with Open Application Programming Interface (MarketWatch)

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