Difference and Differentiation: What next for investment platforms? - Paper - Page 11
The limitation of the technology means manual
intervention is required to bridge this gap, with
SME’s in back-office servicing teams ensuring that
the client doesn’t receive a substandard experience.
Platform providers therefore have client servicing
or front-office teams bigger than any of them would
have thought, acting as the analogue glue between
different digital solutions.
We know the main players in the platform technology
market, and we would all agree that they each have
their flaws. However, the intricacies required within
the technology to support products and investments
to make the platform appealing is a lot more complex
Platforms by Technology
10%
15%
15%
35%
Proprietary
25%
than anyone imagined; the ability to get this right
has been a challenge for everyone and represents
a significant cost of doing business. Having clearly
defined business and technical architecture that
connects day-to-day operations to strategy and the
target operating model are things we see as essential
for financial services business to deliver effective
change; robust frameworks against which cost
and service measures can be assessed, and where
regulatory impact can be understood.
The technology challenge is represented by the
distribution of technology providers; proprietary
solutions are still a sizeable proportion of platform
technology, with FNZ picking up a quarter of the
market (Figure 5).
If we consider the £billions of AUA, then 70% of
market is shared across Bravura, GBST, and FNZ in a
reasonably even manner (Figure 6). Should one be
inclined to separate Aegon Institutional or include
adjustments such as the planned James Hay &
Nucleus merger, then the scales tip further towards
FNZ for both platform numbers and value.
The cost of investing in, and adapting, a technology
solution has often been higher than expected. The
operating model needed to support this type of
change is more complex than imagined, and the
charging model must remain low to be competitive
against other platform providers, whilst also
remaining lower than the original product providers to
differentiate. From our business capability driven cost
benchmark work across the platform sector, we see on
average ~40% of expenditure given to Organisation
Support and Business Management; the logical home
for technology and change capability (Figure 7).
Figure 5 - Platforms by Technology Provider
2022 Platform AuA by Technology
£18 bn
Benchmark Average run costs
(as % of total)
Customer Management
Organisation
Support
Proprietary
Account
Administration
£235 bn
£248 bn
Financial
Management
£148 bn
£204 bn
Asset
Administration
Business
Management
Intermediary
Administration
Figure 6 - Platform AUA by Technology Provider
Proposition
Management
Figure 7 - Altus Consulting Platform Cost Benchmark
Average
11
