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Powering the platforms: The scale of the challenge on Aegon/Cofunds

Seath-Miranda

GBST is an Australian technology firm focused on the retail wealth sector and institutional markets. It launched its first proposition Composer in the UK in 2007. Composer’s 10th anniversary next year is set to be one of the most significant yet for GBST, with the technology provider starting work on the Aegon and Cofunds integration project. We take a look at GBST’s presence and proposition in the UK and the scale of the challenge it faces in supporting this huge upcoming project.

GBST was founded in 1984. After its initial public offering in 2005, it broadened its capabilities through the acquisition of four other businesses in wealth management, capital markets and digital design. Despite being an Australian company, the majority of its revenues come from the UK, Asia and North America. The wealth business in the UK has shown the strongest growth.

GBST is focused on digital capability, enabling access from tablets and mobiles as well as desktops. To meet the business needs of clients, it can now also support annuities, direct share trading, model portfolios and multi-currency. It tells us it sees these upgrades as business as usual and that the road map for new development is constantly refined.

GBST operates on a single code base, which it believes offers a competitive advantage because it puts clients on the same release path when it makes upgrades. When a change in legislation occurs, such as the pension freedoms, it can make updates and release them just once to clients.

gbstdata

Looking ahead, the technology provider is continuing to develop new pensions capability. It can support and administer what it terms “guaranteed income for life solutions” and income drawdown products side-by-side. This would enable these so-called guaranteed income for life solutions to be embedded within a Sipp. The jury is still out on hybrid products as take up has been low but this development work will offer GBST clients enhanced functionality and more flexibility. New mobile apps are also on the horizon, with templates being developed for the next Composer upgrade.

However, the most significant game-changer for GBST is the announcement by Aegon that, following its acquisition of Cofunds, the integrated platform will use the Composer solution. This will make GBST the largest platform technology provider in the UK by share of assets with around £126bn.

The impending integration project is a really big gig for GBST but it is not going to be without its challenges. Aegon and GBST have form working effectively together to launch the Aegon Retirement Choices platform and Workplace ARC. The implementation period was a relatively short nine months.

GBST tells us the Aegon brief was to balance speed to market with good risk management and cost control: critical for any technology project. This project was not without its complexities, particularly as GBST had to integrate ARC and WARC with complex legacy systems supporting Aegon’s insured funds.

The Cofunds integration is a very different kettle of fish. Cofunds has a morass of data and pricing deals that Aegon will have to wade through. GBST will be under pressure from its partner to ease some of its pain.

GBST sees its experience in transitioning client back books from byzantine legacy systems to modern technology as being of critical importance and as such is confident it can deliver.

That said, Aegon is keen to adopt some of the functionality Cofunds possesses that could be key to holding onto users. An enhanced pre-funding capability could be high on the wish list and family-linking is also a feature it may want to develop. GBST will have to enhance its services.

The two will need to work together harmoniously and effectively. GBST has a monthly joint strategy session with Aegon to agree how Composer needs to flex and adapt to coming developments. Oh, to be a fly on the wall in these meetings next year, as both teams wrestle with this hugely challenging project. We hope this partnership delivers the promised rewards to both parties.

Miranda Seath is senior researcher at Platforum

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