Future success will be about adaptability; taking incremental steps to meet changing needs
The last five years have seen the platform industry deal with huge legislative changes while facing political and economic uncertainty. At the same time, the move to a more digitally aware, 24/7 society has accelerated, with people expecting access to real time information on the go. So what do the next five years look like?
In the post-RDR environment, and with continued interest from the FCA in the shape of the Investment Platforms Market Study, platforms along with advisers and providers are under pressure to justify their fees.
Against this backdrop, the industry focus is already shifting to three key areas: reducing costs through better use of technology, enhancing the advice offering with automation and greater integrations with back office systems, and embracing digitisation to improve client engagement and streamline compliance with regulations.
But platforms cannot afford to stand still. Successful platforms of the future will deliver more intuitive, competitively priced, seamlessly integrated propositions that meet the ongoing needs of their customers.
Margin challenges are not going away. As we are already seeing with the Aegon Cofunds and Standard Life Elevate deals, platforms need to seek scale to become profitable, or alternatively, and despite the current FCA scrutiny, create a vertically integrated model.
But to keep budgets under control, future change will need to be low cost, which means adopting a more agile, plug and play approach to development. This relies on getting the basics right or there will simply be a need for more investment down the line.
Platforms will need to box and standardise the core services they offer. Those with a highly bespoke model will struggle to scale. We see the platform of the future as a wealth hub, with the surge in APIs (the way in which different computer systems and applications integrate with each other) facilitating this.
In much the same way you can have hundreds of different apps sitting on your iPhone, the platform of the future will provide the operating system for a huge range of components to create a variety of propositions and service models. It can then be plugged into the adviser’s own back office systems to create a seamless user experience across the service chain.
This model allows advisers to improve efficiency via straight-through processing, single data entry, automated data storage and retrieval. The end investor will also benefit from access to greater information via any device, driving engagement. Parts of the advice process will be automated, helping to reduce overall costs, while human advisers continue to meet more complex financial planning needs.
Platform success in the future will be about adaptability; taking incremental steps to meet changing needs. It is not all about technology, but technology implemented wisely will be key to keeping ahead of the competition, meeting client needs and greater profitability.
David Simpson is head of EMEA at GBST