Ex-GBST man and FinoComp chief executive Ray Tubman on the need for a brave new world of interoperability
Platforms running on proprietary technology often see this as a competitive advantage, even if it is expensive to run. But ex-GBST man and now FinoComp chief executive Ray Tubman does not believe outsourcing is the poor relation.
Tubman is a heavyweight in the platform tech world. He set up Australian technology company FinoComp five years ago, having worked in pensions and wealth management technology since the 1980s.
As the main architect of GBST Composer, I am keen to get his thoughts on the evolution of platform technology.
Tubman has experience of both building proprietary systems and outsourcing. He cut his teeth on in-house tech at British Airways, making enhancements to the corporate pension scheme. But rapidly appreciating the advantages outsourcing could offer, he jumped ship to establish his first software development company InfoComp with Rob DeDominicis in 1988.
In the UK, outsourcing does not mean platforms end up with cookie cutter systems. They still demand – and get – customisation.
Critics of outsourcing often warn of the danger that platforms will fork out for their custom developments, but then roll them out to every outsourcing partner.
Our conversations suggest platforms that outsource accept that sometimes they benefit from developments financed by others, but then other times they are the bankroller.
Tubman’s first project at InfoComp was to build a bespoke system for a client. But the team always wanted to sell it on. This system became Composer.
FinoComp’s current focus is a tool to support Mifid II reporting. TierDrop aims to provide a solution for DFMs required to report on a 10 per cent drop in portfolio value.
Many in the industry see Mifid II compliance as a thankless task with little client benefit. And most DFMs do not have access to, or the appetite to hold, client details. To my surprise, Tubman takes a more positive view.
“The whole industry has done it grudgingly, but it could be really positive. When the team built TierDrop, we had to really scrutinise how to formulate the performance calculations,” he says.
FinoComp looked at Esma guidance but felt that performance calculation method the Dietz formula, which assumes that all inflows occur at the start of the reporting period, was flawed.
Platforms also tend to assume that assets remain in the model for the whole reporting period and do not take into account any assets outside models. TierDrop takes all of this into account.
A by-product of the tool is more useful data and reporting for DFMs from multiple platforms. As they say: necessity is the mother of invention.
This year is set to be the annus mirabilis (or annus horribilis depending on your view) for platform technology upgrades, with a number slated to complete technically tricky migrations.
The prevailing attitude towards re-platforming seems to be thatit is like ripping off a large plaster: painful but necessary.
Does Tubman think the industry could have taken a different, less painful approach? He is critical of monolithic systems: “A lot of these systems have been around for a while; they are massively integrated and maintaining them is massively expensive. Because they are generally not agile, re-platforming becomes a major exercise.”
This is compounded by the fact that, while platforms understand the operational complexities of their own infrastructure, they do not know the target systems they are moving to.
Tubman’s experience has confirmed his belief that operating with multiple technology partners collaboratively is a more effective approach.
He says: “A componentised, micro-service reduces risk. Look at MyFitnessPal and Fitbit. The data from Fitbit integrates with MyFitnessPal.”
And collaboration is not just the preserve of smaller players, with Tubman pointing out thateven Microsoft and Apple now work together.
That said, I find it hard to imagine a world in which the major platform technology providers join forces. “It doesn’t happen in our sector to the extent that it should,” says Tubman.
His approach is only possible if software is designed on a modular basis, meaning that platform tech providers would have to adapt.
But Tubman’s brave new world of interoperability would offer platforms more choice, being able to use the bits of kit they see as market leading.
With Aegon beginning to adopt this thinking in its technology upgrade project, Tubman’s moment of reckoning may not be far off.
2015-present: Chief executive, FinoComp
2007-15: Head of product strategy, then chief executive, Wealth Administration, GBST
1988-2007: Co-founder and global head of product strategy, InfoComp
1988-89: BA Pensions, British Airways
Miranda Seath is research director at Platforum