Axa Wealth says there is likely to be consolidations among back-office software providers over the next five years, leaving as few as three providers in the market.
There are around eight providers of back-office solutions. Axa Wealth managing director of UK distribution David Thompson says that number may more than halve in line with consolidation in the distribution sector.
He says it is difficult for platforms to fully integrate with all the software providers and consolidation will make this process easier.
Thompson says: “There are a number of different back-office solutions and each distribution group uses a different one. My personal view is that we may see consolidation around that space as different distribution groups merge together. Where we now have seven or eight back-office providers, in three to five years, there could be as few as three or four.
“Integrating into a back-office solution can be challenging for all sorts of reasons. Platforms need to make a priority call about which back-office systems are the most important.”
Brunning Newman Houghton director David Brunning says: “I think it is more likely that the poorer back-office systems will just wither away rather than be bought.
“The ones that are succeeding should concentrate on improving their own service rather than looking to buy other systems that have poorer software and are less use to advisers.”