How platforms have taken over, and what does the future look like?

Jul 31, 2019 5:08:40 PM

“Scores of financial advisers are looking to liven up the way they do business by adopting wrap platforms.” 

So ran a Financial Times article, published in February 2007. The article continues: “This is going to be the year of the wrap platform,” one analyst says… “Wrap platforms are a gargantuan leap forward for both IFAs and their clients,” says Justin Modray, an adviser with Bestinvest.” The article is a goldmine; a buried time capsule of the platform landscape some 12 years ago.

Fast forward to the present day and we now know that those predictions have come to pass. Platforms are a gargantuan leap from the disorganised paper filing and even anything else electronic that was available at the time. The reason is simple.

The raison d’etre, really, of any platform, is to make life easier for everyone. Twelve years ago, platforms made life easier for IFAs by making the administration of client wealth simple, reducing back office costs, simplifying compliance and making many planning activities much more streamlined. For the client, they provided something that had been lacking for a while; a simple view of their wealth, as well as a deep dive into all its intricacies.

The next stage of the platform will be less visible.

The platform was originally a consumer-facing vehicle; advisers saw an interface, but individuals also logged in and saw their finances. The platform is now more than that.

Imagine the complicated structure that underpins an investment being made by an individual or an adviser using a computer anywhere in the world. That individual makes their choice on the platform and, beneath the surface, many different records and transactions are created. The order to invest is placed. Money is moved between accounts. Reports and emails are sent and updated. Back office systems track the transaction, record it and produce compliance documentation. The process is already a super-computer-fuelled highway of automation.

Now imagine it could be better, faster, more resilient, increasingly secure and… delivered by the technology that underpins platforms.

Whilst that change is happening, platforms are now at the point in their maturity where re-platforms are common, even necessary. Like all technology, each individual platform has the potential to become obsolete and out-dated; the use case that the individual features of the platform once addressed is now no longer a point of need.

But re-platforming feels as though it is a stage in the platform journey that must change with the times. Old Mutual’s move to FNZ technology will cost around £750 million, when it is finished. SJP spent over £250 million on its own long-term switch. Such costs, even for the titans of financial services, must be unsustainable long-term, particularly given the fact that technology will move quicker than ever, offering new advantages at a faster rate.

The modern platform must be sustainable long-term - scalability and flexibility are key in this regard. SJP, like many others, must hope that theirs is fit for the future,  as relentless innovation is continually defining the financial world of tomorrow.

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