Difference and Differentiation: What next for investment platforms? - Paper - Page 5
As we near the top of the innovation s-curve (Figure
1) we need to be considering what the next period
of disruptive or radical innovation looks like. Is
it ‘adviser-as-platform’, integrated hybrid advice
solutions, or something else? Where does the
regulatory landscape fit with this? Where are the next
group of consumers coming from and what do they
expect? And how do we embrace that and avoid our
own Kodak moment?
Innovation is a broad term that can apply to all
aspects of the organisation from product and service,
through to business model, technology, strategy
and more. Innovation can often be mischaracterised
as only encapsulating breakthrough, disruptive
change, but many are micro, sustaining innovations;
building continuous improvement through refinement
in technology, operations, and process to remain
competitive on an ongoing basis.
The competitive landscape continues to intensify. The
rate of change organisations confront is constant as
technology lifecycles go exponential. Consequently,
great emphasis has been placed on ‘innovation’
as senior leaders have tried to develop creative
organisations with an innovative culture. From ‘labs’
to ‘garages’ and ‘design thinking’ to ‘creative problem
solving’, organisations want to adopt a start-up
mindset to both respond to, and instigate, change
in the market.
Delivering truly disruptive and radical innovation in a
heavily regulated environment isn’t the easiest thing
to do and it has taken a global pandemic to properly
shift gears and improve adoption of technologies
that have been available for quite some time. The
pace of change over the last 20 years for platforms
hasn’t necessarily matched the level of innovation
we’ve seen in other areas of financial services; new
technology has been adopted and implemented but,
as Henry Ford suggested could be the case without
some serious innovation, have we just ended up with
faster horses?
Radical innovation will either require, or trigger,
some sort of regulatory reform; the current rules
around platform service providers evolved from the
fund supermarket definition, which was created in
2005. The FCA has proposed, in CP22/24, to look at
‘core investment advice’ and announced a further
detailed review of advice & guidance in conjunction
with HM Treasury. The stated scope and objective
for this review is from a ‘blank page’ and consumer
focused; it is important that within this review there
is an acknowledgement of progress over perfection
when considering how best to protect consumers
and enable access to advice and investments for
the mass market.
With more retail investment solutions being delivered
through this platform model, it prompts us to ask
some key questions: what is the difference between
a platform and a product provider? Is the market
becoming homogenous and how do you differentiate?
What will the next 20 years hold?
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