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GBST: There’s no room for start-ups in platform tech game

Many hands reach up to grab piggy bank one holdsEstablished tech firms with deep pockets will win the race to support new platform business as challengers enter the market, crowding out fintech start-ups.

That is the view of GBST, whose software sits behind adviser platforms Novia, AJ Bell, Aegon and Alliance Trust Savings, as well as the newly launched Vitality Invest platform.

As two new platforms enter the market and providers consider switching their underlying technology during replatforming, competition between the main players to run the platform’s actual infrastructure – GBST, Bravura, FNZ, DST (formerly known as IFDS), and SEI – is arguably hotter than it has ever been.

There are differences between the tech providers. GBST and Bravura offer technology-only services whereas FNZ, DST and SEI can also run administration services for platforms.

GBST Europe, Middle East and Africa head David Simpson tells Money Marketing he sees Bravura, which runs the Nucleus and Ascentric platforms, as its main competitor in the UK retail investment space.

However, Simpson says there are still gaps in the market that bigger players like his are yet to take advantage of.

He says: “If you go up the value chain to the private client investment management space there are a lot more smaller tech providers there and no major big player so that creates an opportunity for someone.”

GBST EMEA business development head Darren Bayley is more bullish when it comes to its competitors in the UK, saying disruptors are unlikely to enter the retail investment space.

Bayley says: “With the level of regulatory change that has gone on, you need to have deep pockets to be in the market. It will be a brave chief executive of a platform business that will want to go with a new start-up.

“You have seen the replatforming issues out there, you are going to want to go with someone with a strong balance sheet that has invested significantly from a research and development perspective. If you are going to compete with the likes of ourselves you will need to have deep pockets.

“We will continue to see two or three dominant technology partners in the marketplace with slightly different areas of specialism.

“With the sheer scale and the managing of client money and the key functions a platform performs, you are not going to give that to a fintech start-up.”

With most of the main platforms in the market either having completed their replatforming, currently going through it, or steadfastly committing to proprietary technology, GBST says it is starting to look elsewhere for new clients.

In this market you need deep pockets. It will be a brave platform CEO who goes with a start-up

Bayley says: “Some of the Sipp technology has not been designed for scale and that has created an opportunity for GBST. There are a number of providers out there who wouldn’t class themselves as launching a platform and would be horrified to think they are going down that route but they are [looking] to launch new products and services.”

Bayley identifies the direct-to-consumer retirement market as another potential target, while Simpson also sees opportunity in legacy products sitting with life assurance companies.

He says: “Post-pension freedom that is an embedded risk [and those companies need a new proposition] to extend the relationship with the consumers. There is a big source of assets there that needs to be serviced and those providers need to refresh their technology and that is a big source of activity for us at the moment.”

GBST has also refreshed its front-end technology with Vitality the first to run its Catalyst software. Catalyst is an upgrade to Composer Web and will eventually replace that product.

Simpson says there are a number of clients in the pipeline GBST is looking to bring to market using both Catalyst and Composer over the next 12 months.

He says: “We do see the interest in the at-retirement space as a key area – we are focusing on some of the product development of the framework, not just the technology aspects.

“We believe the FCA’s drive for competition, for options and outcomes, guidance and advice and education in that space will bring a lot more providers to focus on that part of the market, which will be exciting for us.”

Simpson says GBST has strong ties with the regulator and provided information for its platform market study, of which the interim report is due in the coming weeks.

He says: “We did talk to the regulator a couple of times and answer questions they had around the role of technology providers in that space. The FCA wanted to understand the contribution we make to the market.”

He adds: “We have a good relationship with the regulator although we are not a regulated firm. If you look at the FCA’s mission statement, it is starting to have a heavy focus on technology. Therefore as a direct result it is keen to understand more about the key technology providers in the market and GBST is one of those.”

Despite Aegon being criticised by advisers following the migration of GBST-run Cofunds’ clients to the new Aegon platform in May, Simpson says from a technology perspective the move was successful, which Aegon has also acknowledged.

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  1. Well to respond to the headline some will remember Kodak and IBM saying the same just as the digital camera and Hewlett Packard entered the market. The market moves on and makes existing models irrelevant….both of those examples have themselves been replaced by newer models and technology….the Tablet Cloud and digital phone. Only a matter of time!

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