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Atomic Updates: A Brief History of Data Sharing in the Financial Services Industry

Lucas Babbitt
March 24, 2025
Image by Hack Capital on Unsplash

I get to have a lot of interesting conversations with a variety of people about financial services.

From clients and advisors to technology/service providers and investors, the industry is so broad and so deep that there is always more to learn from the people with whom I am speaking.

Questions folks often ask me are, “Why did you start Atomic Insights when you did?” and “The pain points around processing and reporting on payments are not new – why has there been such a dearth of solutions, historically?”

The answers are rooted in the ways in which communications and data sharing have evolved in the industry.

The fact is that each generation has introduced new technologies that have made massive improvements in the ways in which the industry does business. And yet, with each new improvement, clients have an appropriate desire to receive even more information in shorter periods of time – it is their money after all!

While the improvements throughout history have been massive, building a platform like Atomic Insights only became possible in the last few years with the advent of robust APIs at the various banks and custodians.

For those not steeped in the history, the evolution of data-sharing methods in financial services is worth recounting. From Morse code to today’s cutting-edge APIs, each technological leap has addressed critical industry pain points while paving the way for new innovations and massive advances in industrywide productivity.

Pre-Electronic Era: Manual Processes and Paper-Based Systems

Before the 1990s, i.e., before the internet and long before our analysts, associates, VPs and even some MDs were born, financial institutions relied on:

Telephone orders for stock trades, with clerks manually recording transactions

Physical documents like telex messages and mail for cross-border payments

In-person verification at bank branches for account updates

Payments made on behalf of clients via the wire system were much more efficient than trade settlements in the pre-internet days.

In fact, in 1918, the Federal Reserve launched Fedwire, the interbank wire transfer system that initially used Morse code over leased telegraph lines. By the 1930s, teletype machines had replaced Morse code, allowing typed messages to be sent electronically. Believe it or not, Fedwire remains in use today, albeit with significant improvements.

In the 1970s, computers and high-speed telephone networks entered the fray and replaced telegraph lines. Think about that: We could land on the moon, but we still had to use telegraph lines to move money until the 1970s. With the advent of computers, new systems such as CHIPS (Clearing House Interbank Payments System) and SWIFT (Society for Worldwide Interbank Financial Telecommunication) were introduced.

Overall, the pre-internet methods of moving money and data around were error-prone, slow (often requiring 3–5 days for settlement of trades), and limited in scale. Check out "After the Trade is Made" for further study. For better or worse, the 1987 Black Monday market crash exposed systemic vulnerabilities in this fragmented system, accelerating demand for electronic solutions.

The FIX Protocol Revolution (1990s)

The Financial Information eXchange (FIX) protocol emerged in 1992 as Wall Street's first standardized electronic communication system which enabled machine-readable messages to facilitate equities trades.

The early FIX systems reduced trade errors by over 70% when compared to voice-initiated trades with brokers. The technology saw rapid adoption in the 1990s and added derivatives and foreign exchange trading in the middle part of the decade.

As with Fedwire, FIX has persisted, and in 2024 it supported 150+ message types across a variety of asset classes, processing $15 trillion worth of trades daily in global markets. FIX streamlined things so much that trading has become much less manual and burdensome than the practice of sending payments, at least until very recently.

Flat File Distribution and SFTP (2000s)

The rise of complex financial products and the sheer increase in volume of activity demanded bulk data transfers, which led to the development of the Secure File Transfer Protocol (SFTP).  

SFTP enables CSV/XML files to be transmitted nightly among data providers and data consumers. The key use cases for flat files are portfolio reporting and accounting, post trade processing, risk analysis, and regulatory reporting.

Though flat files have slow update rates, require lots of manual reconciliation, and are less secure than APIs, they remain in wide use because of their excellent ability to handle large datasets on minimal infrastructure investment.

Many reporting platforms such as Addepar, Orion, and Tamarac still rely on flat files to this day for data ingestion due to these advantages.

API Driven Information Exchange – Welcome to the 21st Century (2020s-Present)

In this decade, banks, custodians, and other financial institutions have begun to gradually shift toward API-based integrations due to their advantages in real-time data synchronization, automation, security, and scalability.

It is exactly these improvements in data infrastructure and data transmission that have enabled Atomic Insights to develop its platform. Via bank and custodial APIs, Atomic Insights is able help RIAs and Family Offices operate much more efficiently by automating and streamlining the processes associated with money movements.

With $113.7B in global fintech investment in 2023, much of which has been directed to the development of APIs, the space is advancing rapidly, marking yet another huge leap forward in financial services safety, soundness and productivity.

If you help move money at a Registered Investment Advisor, a Family Office, a Trust Company or a Broker Dealer, you should check us out here:  https://www.atomicinsights.io/.  

And feel free to reach out, we’d be excited to show you how we can help with your money movement processes.