In the Post-Pandemic World, who will win the Battle of the Platforms?
Jun 24, 2020
As we inch slowly towards some daylight from the darker days of the Covid-19 crisis, Hubbis felt it was an ideal time to deliver a high-level discussion on which of the providers of digital execution and custody platforms will survive and thrive in the post-pandemic world. The Hubbis Digital Dialogue discussion of June 18, titled ‘The Battle of the Platforms’ brought together a fabulous five of electronic platform leaders in Asia to debate whether it will be the incumbents – the traditional global private banks – or their own ranks of online, digital platforms that will offer the most compelling, best-value execution and custody proposition in the years ahead.
As well documented in many Hubbis forums, private discussion events and reports, the world of custody and execution has been evolving apace in recent years. While there was a time, not that long ago, when the only real viable options for independent wealth management firms and family offices in Asia were the Tier I private banks, today the digital online platforms have been able to surge in both prominence and efficiency, emulating their performance in the major financial markets, especially in the US and Europe. As these platforms have been shifting their attention to the dynamic wealth markets of Asia Pacific, wanting to capture a sizeable slice of what had in the pre-Covid-19 world been the most robust region on the planet in terms of economic momentum and private wealth creation, the stage has been set for a dramatically more competitive environment.
The fascinating discussion debated the full spectrum of issues as these newer entrants battle it out to offer digitised, transparent, cost-effective solutions that today’s clients increasingly require and expect, providing not just efficient access, execution and custody, but also simplified onboarding, real-time analytics, reporting and portfolio valuations, bespoke solutions, upgraded user experiences, greater transparency, a broader universe of product, and discrete, high-quality regulatory compliance. But, whatever these digital disruptors maintain – and they do have outstanding offerings – there is little doubt that the traditional incumbent Tier 1 banks have been fighting back, and will do so even more vigorously, building their digital capabilities, honing their internal structures, and re-focusing and sharpening their execution and custody capabilities and propositions.
The Big Picture – Market Evolution
The discussion opened with one expert setting the scene, observing that the pandemic had resulted in a far greater need for digital, putting the traditional private banker custody and execution model under sudden increased pressure. “This is simply the acceleration of a pre-existing trend,” he reported. He added that while the millennials and younger generations are more native digital, this hiatus has also encouraged older clients to become more digital, something to which they have largely adapted well.
A fellow panellist concurred, adding that the conversations around the digital platforms have certainly become more intense, but so too at the larger banks as well, as they have suddenly realised they might not have moved rapidly enough.
“These past few months have made quite an impact on them,” he remarked. “We hear of accelerated hiring of IT staff and developers, and so forth, we see Hong Kong and Singapore moving ahead fast with their e-banks, and all these developments point towards digital becoming a core fundamental in the way that wealth management, including private banking is delivered. For us as platform providers, that means that we constantly have to evolve what we are doing, we must continuously talk to our business partners, they feed back from their end clients, and we constantly refine and upgrade tools and functionality. We must stay ahead of the pack.”
Expert View - David Perez de Albeniz, Regional Manager Asia, Allfunds: “The pandemic brings along new opportunities while the outsourcing of solutions becomes a higher priority. With digitalisation disrupting the fund distribution channels, Allfunds is well-positioned to streamline distributor’s middle- and back-office and make it efficient for them to connect the service providers, fund managers and financial institutions electronically.”
Expert View - Damian Hitchen, CEO Singapore, Swissquote: “Whilst we believe that quality face-to-face advice to wealthy clients will always be fundamental, it is clear to us that basic functionality such as clients having their portfolio details available digitally, and straight-through-processing “STP” of online listed orders is now a fundamental, and to not provide that is unacceptable going forward.”
Expert View - Mark Nelligan, Chief Executive Officer, Pershing, a BNY Mellon company: “The platforms that will survive are the ones that are always evolving, nimble and recognise the value in their data. The future lies in being able to provide that data back to managers and allow them to make the best possible investment decisions for their clients.”
Another guest highlighted how the pandemic had lifted trading activity due to volatility, especially with the millennials, traders and others stuck at home for so long. He explained that it is not a simple battle between the platforms and the incumbent banks. “You can have a platform, such as ours, which services those advisors that are hand-holding their end private clients, and for example, if those clients want private equity, that does not fit the platform model, although we do have to figure out ways to bring those assets into our reporting and compliance infrastructure.”
Picking up on this point, another expert agreed that one of the biggest problems the platforms need to solve is to offer different asset classes, such as private equity, real estate, and alternatives, such as art or other collectables.
“How do you put it all together and allow the advisor to look really clever and manage that process?” he pondered. “As a global custodian as well, we have really come to realise that while we have been servicing the backend, there are numerous issues that they have as institutional asset managers and as wealth managers for the remaining 95% of the equation, the front- to middle-office, and the whole investment process.”
Accordingly, he argued that the platform of the future is the one that is going to be nimble enough to interact with other best in breed solutions to better service advisor clients, to make them smarter and more effective in front of their end-clients. “Those that do not,” he warned, “risk becoming niche players rather than broad-based platform providers.”
“Our USP,” added another panel member, “is in providing clients with a combined multi-asset, multi-geography investment platform where they can invest in pre-curated portfolios by leading household names or create their own investment portfolios. Or as a large number of our clients do, use a combination of both.”
Another guest noted that once people go digital, they stay there. “This,” he opined, “means the quality of the digital offering will become a huge area of competition. Currently, not many private banks have high-quality digital platforms. Those that do will win out over those that do not, both for the RM/advisor and the client, as both elements are essential.”
Expert View - Adam Reynolds, CEO APAC, Saxo Markets: “Private Banks and Wealth Managers are likely to see an acceleration of the move to digital for their clients, and this has been visible as a result of the Covid-19 crisis. Whilst this move has already fully happened for the younger generations, the necessity of becoming more digital has accelerated the move in the older, wealthier generations as well. Those firms who want to continue to grow their client base need to have a competitive digital offering with a high-quality user experience. Whilst banks have been spending huge amounts of their technology budgets on regulatory compliance, they have not developed a high-quality user experience mindset as yet. At Saxo, we are focused on providing the wealth management sector with tools to make the advisors’ job easier and significantly improve their own user journey. At the same time, the end clients of the advisors can see their portfolios using our award-winning platforms just as our self-directed investors do already.”
Expert View - Damian Hitchen, CEO Singapore, Swissquote: “Whilst platform providers by definition can aid the delivery of a move to digital, platform providers need to constantly be in dialogue with their Partners, the users of the platform, to ensure that core functionality, including required markets, reporting, different types of trading orders and so forth are relevant and in sync with market needs.”
Expert View - David Friedland, Managing Director, Asia Pacific, Interactive Brokers: “For us starting up in Singapore, competition comes and goes. We have been fortunate to have a proven track record of putting in the necessary investment allowing us to build organically. We certainly expect to have a stable and growing presence in Singapore, providing wealth managers with systems, access and a firm they can rely for years ahead.”
“We are an execution-only player,” said another guest. “We therefore have hundreds of thousands of direct clients who are self-motivated and execute themselves, but here in this region we are mostly focused on supporting the wealth manager community, typically the independents who are giving advice to their clients, but executing and seeking custody through ourselves, and also using our various functionalities and tools on the client management and portfolio side of things. We are firm believers that the advisory piece will always exist within the marketplace, which is why we spend so much time working very closely with our partners to hone our tools and services, to ensure that we have got the right tools for them to enable their business and spend more time with clients, rather than doing middle and back-office admin, they can outsource that to us.”
A huge differentiating factor for the electronic platforms is very evidently that they offer broad, multi-asset, multi-geography curation and access that enable clients to diversify their portfolios through a single avenue, and then analyse their performance real-time. “We provide our clients with a low cost, high-quality platform and service and price our products and services accordingly,” he explained.
Another guest explained that their platform focuses on mutual funds and does not purport to emulate some of the other platforms under discussion. “Our mission is to be very specialised only in mutual funds and trusts; we do not focus on other products or asset classes. We plan to remain specialised in what we do and not try to expand our wings too wide.” He added that the mission is to continue to focus on being the best of the best in their chosen segment.
Views from the Top – Audience Opinions on the Digital Platform Proposition
After the discussion, Hubbis immediately sent out a post-dialogue Survey to delegates and received 108 replies within just a few hours. We first asked the delegates for their insights into what they want, in other words, why they might already have switched to, or might later select a digital/electronic execution and custody platform. We have edited these replies to product the following insights from the marketplace.
Hubbis: What do you want from an electronic execution & custody platform?
- 24/7 accessibility.
- Quick execution and cheap brokerage.
- Access to global investments and trading capability within a single relationship.
- Security, reliability, functionality.
- Lower pricing [than the incumbent players].
- Price and speed.
- Rapid execution, low cost and safe and secure.
- The capability to cope with multi-assets.
- Easy onboarding.
- Efficient operational support.
- Instant confirmation.
- Transparency of execution costs and the information retained by the platform.
- Smooth and efficient straight through processing.
- Financial stability/strong balance sheet.
- Cybersecurity risk mitigation is a key priority.
- Top of the line trading functionality, and the ability to easily track assets.
- We expect a human being available at all times to answer calls and help solve problems.
- The cost relative to service levels - private banking trading is both expensive and clumsy.
- Price transparency, seamless execution, easy to use online and digital tools with relevant analytics.
- Online execution without going through the cumbersome process currently still being used by some of the big, mainly European, banks.
- Ease of trading with available tools to create bespoke portfolios, and at a more affordable pricing compared to traditional banks.
- For execution, it is definitely efficiency, pricing, ease of use and security. And for custody, it will be pricing and security.
- An execution platform has to be simple to use, transparent and direct to market. A custody platform has to instill confidence and be backed by strong financial credentials.
- For custody, data integrity, clear and transparent of ringfencing of assets, timely reporting, competitive fees that commensurate with services rendered (the value offered rather than pricing, per se).
- Broad market access, systems that are easy to understand and navigate, security is of utmost importance too. Platforms must not be easily subject to errors such as live prices frequently not rapidly or accurately updating.
- For execution: accessibility to global markets and main asset classes with direct access to execution desks for certain orders (such as OTC type trades, structured products, and others). Other vital facets include an easy onboarding process (it must be agile and as digital as possible), and the provision of basic research. For custody, reasonable pricing, as this is critical for our business.
- I expect a wide variety of product and order types, direct and real-time market access with quotes, network stability coupled with 24/7 accessibility, and minimal risk of the platform going bankrupt or freezing my assets without reason. Otherwise, I see no reason to use a platform as opposed to a private bank if I am not getting the same services with the added benefit of convenience and efficiency.
- The diverse challenges in the investment industry have brought a new level of focus on the costs and risks associated with the end-to-end transaction lifecycle. Increasing competition, regulation and globalisation have driven the need for increased efficiency, transparency and entry into new markets while safeguarding against increased operational risks, complexities and costs. An execution & custody electronic platform will automate trade execution, offer post-trade enrichment, clearance and settlement processes in markets and liquidity pools around the globe. The platform will enable end-users (clients) to avoid the complexity and costs of establishing operations locally in multiple countries or modifying operations to each market environment.
Margin Compression, Fees & Transparency
Margin compression at the banks and other wealth management firms, and therefore the enhanced impetus towards cost compression are both interlinked and key factors, explained another panel member, although he conceded that these pressures are less in Asia than, for example, in the US.
“These trends make it necessary to find other ways of charging clients for other services, whether they are services, or whether they are things in the background that are less noticeable than the commissions,” he commented. “But this all has to be transparent, and in that regard, there are different degrees of transparency. So, for example, Australia requires absolute transparency, no trailer commissions and so forth, whereas in Singapore we still have trailing commissions, despite all predictions to the contrary.”
Also on the subject of fees and transparency, a guest commented that as a business, they must help the advisors by offering services at a competitive level so those advisors can make money. “The race to the bottom helps nobody,” he warned, “so we have built a whole host of management tools and remuneration tools and streams within our platform.”
Another panel member agreed that the pressure on fees in a constant, noting that a 0.5% saving over a decade for big clients is a huge saving.
“My view is that price is a point of discussion only in the absence of perceived value,” added another expert. “If our clients see value, they won’t talk about price, and if in turn, their clients see value, then they won’t be talking about price.”
He added that the pursuit of transparency highlights exactly what customers are paying for. “We then offer different advisors the choice of certain types of functionality – some may not want execution, for example – so that they themselves can decide how to stack it up and what they will pay for. Similarly, when it goes towards their clients, as long as their clients can see what they are getting, in our experience, the advisors can avoid the conversation about price by delivering a good service and value. If we are transparent, there are different ways of layering the costs and people will accept that there is a price for a particular service.”
One guest highlighted how their platform offers transparent data for every single product on the platform, with a fact page with information about all costs including execution and holding costs, as well as with a return history net of all costs. “That sort of transparency is a big value factor for clients looking at trading on a platform versus via an advisor,” he reported. “If advisors are recommending clients buy, for example, structured notes, the client must be able to understand the different factors that impact the price of that product.”
A guest highlighted how remuneration in the form of rebates from the producers remains a very valid approach in Asia, and still results in a positive environment for all involved, the advisors as well as their end clients, the producers and the platform itself. “All the avenues have to be totally cleared of roadblocks for the individual client to access the mutual fund universe in a seamless way,” he remarked.
Seamless digital account opening is vital, especially during a time of lockdown, said one panel member. “We have seen a huge increase in volumes this year,” he reported, “and it is a massive advantage for digital operators like ourselves that clients can actually open an account remotely with us, and stay fully compliant. The more accounts you can open means the more accounts you can fund, which means the more flows can generate, translating to more revenues, profits and so on. And we are always working on how we can do better going forward, and account opening and compliance and monitoring is certainly an aspect that we are heavily invested in.”
Another panelist explained that this whole area of endeavour is critical to success. “We are extremely meticulous, and we spend hours of each week working on this with different teams,” he reported. “Lowering a drop off rate by a couple of per cent at one of the eight steps from website visitor to an active trading client can make a huge difference in terms of number of clients through the door. Increasing the STP flow using different technologies has driven a huge growth for us. We are now running at ten times the levels of 18 months ago in terms of new clients per month. Achieving the optimal onboarding experience and outcome makes a huge difference for direct clients, and for IFAs and EAMs. this is a massive differentiator for digital platforms versus the traditional banks.”
“The skillset around digital onboarding and giving the client an optimal journey as they come into your platform are essential,” said another guest, “and we are always trying to optimise those, and there is always room for improvement. We have certainly done a lot of work on successful validation of identity and address, and I am sure none of us here want to let bad actors in. In the vast majority of cases, we validate and get a client onboarded in Singapore within three or four minutes and have their account funded pretty much straight away. That makes it much more successful for us in terms of turning an account application into a trading client. If you can do it all within five minutes, then the client will probably trade there and then, but delays harm.”
He added that in terms of numbers, the uptake for their platform on new clients onboarded in 2020 has been immense. “We are doing four to five times more than what we were doing this time last year; in fact, I think June will probably outstrip March in terms of the number of new clients coming in the door, partially because people have got some time and they are at home and want to get involved in the markets, and also because they are also looking for more international exposure in their portfolios, as they see wider geographic differences in how different countries are handling the virus and therefore likely economic performance ahead.”
Another expert offered some nuances to the issue of onboarding, noting that it is naturally easier in well-regulated and advanced countries than for clients from a high-risk country. “You then have to balance what you can automate versus working everything manually. And if institutions give us everything we need, we can do it rapidly, but for individuals, it's a rather different matter.”
He added that on the institutional client side, an onslaught of new accounts means the platform must focus first on who is important. “The new accounts with a larger AUM, larger professionals, financial advisors, those clients tend to get a little bit more preference over the individuals,” he reported. “It is something we keep working on, and I am sure all this will not be solved overnight, this will be an area of continuing challenge in years to come, because regulations and practices keep changing as well.”
Another word on the subject of onboarding came from a guest who explained that the onboarding of distributors and asset owners takes not minutes or days, but two to four months. “On the other side,” he reported, “with the mutual fund managers, we are making good strides in digitally onboarding them and bringing the lead time down to one week, benefitting the wider wealth management industry we work with.”
The panel turned to custody, with one guest highlighting the importance of size, capital, history, governance and financial stability. “We have been around a long time; we take risk cautiously, we have nothing off-balance sheet, whereas as we all know during the global financial crisis some of the investment banks had to be bailed out due to off-balance sheet exposures. So, in short, customers must look at the history of profitability and general stability.” He added that if exposures are suffered, it is vital to be transparent with the market, and to keep losses to within a very small percentage of capital.
“Can traditional private bank custody platforms survive?” pondered another guest. “Yes, for some time still to come, but they will continue to lose market share if they do not offer a strong digital experience.”
Expert View - Damian Hitchen, CEO Singapore, Swissquote: “Platform providers also need clarity in their roles in the ecosystem. For ourselves, we are a digital global custodian, execution and institutional client management portal, but we are not an aggregator or risk management provider, so firms need to be clear and deliver on core roles, and then partner or provide a facility to plug-into other specialists.”
Another platform provider explained that their platform does not offer custody. “All our client assets are custodised with one of the major banks, and all of the client cash sits basically with the major banks here in Singapore or Hong Kong. That is entirely independent of us and protected by the regulators.”
Meanwhile, he reported volumes had risen to insanely high levels this year, with the platform very successful at keeping up with that incredible demand. “And today, we have more concurrent users on the platform on a daily basis than we did at the peak in March, so we are continuing to grow rapidly and still coping well. We’ve always worked on the basis of having four times the peak day as a capacity, and now as the peak day grows, we keep having to add more capacity, so it has been a testing time, but we have done well.”
Another expert explained that the issue of safety is incredibly important, but probably overplayed as a factor because all of these businesses are regulated. “We have to segregate our own assets from client assets,” he noted, “Investors and advisors should be looking more at how are we set up, how resilient we are as providers in the event of an event, then the key is whether players put the balance sheet at risk, for example in investment underwriting. As to resilience, we had to move almost 95% of our 50,000-strong employee base to work from home in a space of four days, that was a true test of resilience. Who would have thought that dealing rooms could be operating from home?” He concluded this is a much bigger issue than safety, as asset are segregated under the supervision of the regulators.
Views from the Top – Audience Opinions on Custody
After the discussion, Hubbis immediately sent out a post-dialogue Survey to delegates and received 108 replies within just a few hours. We wanted to probe was how well the private banks are doing in competing to retain their custody clients, and we also wanted to uncover the main reasons why wealth management firms might not opt for custody through the digital platforms. In distilling these many replies, we would conclude that the ‘Yes’ vote was in favour of the private banks surviving in the world of custody, providing they upgrade their digital interface and levels of service, as they also have the impression of greater stability than the electronic platforms, a factor that came through clearly when we asked what hindrances there might be to the uptake of digital platform custody. We have selected these replies from the market players to these two vital questions.
Hubbis: Can the traditional Private Bank custody platforms survive and thrive?
- Yes, clients like diversification and private banks offer other unique services.
- Yes, if they are able to adapt to digital innovation and offerings to their clients.
- Yes, for full touch - increasingly they will utilise the services of such firms as Interactive Brokers who can do the execution, accounting and back-end cheaper than they can do in house and focus on their real value added.
- Yes, there will always be a market for them for the ultra-high net worth clients who require a more personable experience.
- Yes, they will likely survive as they are evolving as well.
- Yes, I think so, but they must adjust to modern times.
- For custody, balance sheet and execution, yes. However, other services like advisory and so forth will move to more specialised houses like EAMs.
- Yes, by consolidating and outsourcing services to larger more efficient providers.
- Yes, if they adapt. At the moment, we don't see a big gap in terms of pricing between traditional PBs and alternative (digital/online) platforms.
- Yes, they are still valid at this time, but may become obsolete in future as digitisation grows.
- Yes, I believe traditional Private Bank custody platforms are still relevant and clients still demand good and strong names for custody of their assets.
- Yes, but only if they digitise processes completely to benefit from real digitalisation. Otherwise, I doubt if they can really scale up enough to be competitive.
- Yes, but they need to be modified to be more EAM friendly.
- Yes, those private banks that have strong balance sheets and have invested in technology and proper digital interfaces will survive.
- Yes, for now but I believe the market will consolidate further and eventual survival might be tough.
- Yes. Not only are some Private Banks realising the urgency to convert to a more accessible and user-friendly digitalised platform, but there is also an abundance of clients who require a certain level of hand-holding when it comes to money management and investment decisions.
- No. Digital disruption within private banks is happening and the traditional will soon fade, especially for execution and custody where the platforms are overwhelming, as they offer: seamless Straight-Through Processing (STP), global expansion through connections to the global markets, automatic generation of client settlement instructions for fund services, and the platforms are seeing soaring STP rates with increased operational efficiency.
- No, unlikely as the costs continue to escalate because of compliance requirements from regulators.
- No, it needs to be supported with other products, as the custody business doesn't generate enough profit nowadays.
- No, it will be increasingly difficult for traditional private bank custody platforms to compete against new digital entrants that provide competitive pricing; incumbents may have to expand their business models in order to retain digitally savvy HNWIs.
- No, as customers expect custody services free of charge.
Hubbis: Describe the key factors that may deter you from using a platform custodian rather than a traditional private bank.
- Lack of privacy and security.
- Lack of security for clients’ private data.
- Worries over cyber-security.
- Concerns over compliance issues.
- Issues relating to regulatory oversight – the banks are very closely regulated and monitored.
- Regulatory differences in each country, red tape, cost-related issues.
- The lack of transparency of how the custodian platform is managed.
- Platform custodians are not yet able to report on all a client's assets, whereas a private bank provides clients with a ‘whole-wealth’ balance sheet.
- We would want custody of private equity assets.
- The ratings of the custodian may decline.
- The credit profile of the platform – whether they have sound financial backing and/or are well-capitalised.
- A custody platform must be backed by a strong financial institution.
- We fear that if anything happens to the custodian, there is no third party to reach out to.
- Too many answers from an ‘unfriendly’ machine.
- The lack of human touch to solve problems.
- Lack of personal touch and flexibility.
- Fear of sailing into unchartered waters. I have been a traditional sort of banker for three decades. There is always some resistance to change, and there are considerable initial costs for the change to digital platforms.
- Concerns on security, breadth and depth of the product shelf and capabilities, integration, and lack of openness.
- We see several obstacles – the perceived counterparty risk, the lack of timely responses and professional client services, the inflexibility inherent in purely online client relationship channels, and then cybersecurity risks.
- Mainly the personal service aspect and the instability at times due to heavy network traffic; this weakness is particularly evident when it comes to virtual platforms' attempts to attract clients through special offers. At times, it is impossible to access the account. Moreover, these platforms are prone to periodic service disruptions, and it could be a severe inconvenience when one becomes overly reliant on them as opposed to the banks.
Market Evolution – Automation, Data, and Bespoke Customisation
Automation is here to stay and become more prevalent, one guest reported. “We will also be under greater requirement ahead to give back the data that we sit on to the wealth managers to use themselves. Three to five years ago, we were perceived, and we perceived ourselves as safe-keepers, custodians. But increasingly our clients, the managers, wealth managers, institutional managers are all under a lot of pressure to deliver alpha, and many answers sit in the vast array of data that we sit on. We have a unique position where we see across clients, and the patterns of a particular investor will help the advisors immensely. Data will drive value creation.”
A fellow panellist concurred, adding that his firm is working on how to make that data not only available to fund managers but also useful in two ways. “First,” he said, “we can analyse the data flows that we see passing through the platform, so they can understand which products they might be missing. And second, in the case they already have the products, data can help them position those better within the client space. Fund managers see this as really a valuable element in their dealings with us.”
Expert View - David Friedland, Managing Director, Asia Pacific, Interactive Brokers: “Interactive Brokers has recently topped USD200 billion dollars in AUM. With over USD8 billion in capital and no hidden off-balance sheet assets, you can argue we provide the comfort of a bank without the high price. At the end of the day, if an advisor can charge to his clients less while earning higher income, it is a win/win for both.”
Expert View - David Perez de Albeniz, Regional Manager Asia, Allfunds: “With Asia being the growth engine for mutual funds, while customer expectation of seamless and personalised experience getting higher than ever before in the region, we continue to see Asian markets offer great growth potential. With our platform that provides extensive fund data, reporting, analytics and portfolio management tools, we hope to support Asian distributors in their digital transformation.”
An expert highlighted the need to make the user experience easier and more enjoyable for the clients, and at the same time expand the range of products. “We also want to offer different tools, different access, so for example a quality portfolio advisor that helps bring more client assets under our umbrella.”
Addressing the user experience, an expert explained that this encompasses everything from when the client first goes to our website to the onboarding flow, how the platforms frame the questions to make them easy to understand, how they are asked to authenticate their ID and address, how the platform engages with them as new clients, how it provides insights and trading ideas, and how the platform navigation is both simple and yet sophisticated. “In the context of the advisory space,” he added, “the user experience has to also include how the advisor interacts with the client, and how that advisor workstation is in sync with what the end client sees.”
“We are focusing on expanding our presence as an independent marketplace, with global coverage in terms of asset classes and geographies,” said another guest. “We see ourselves as a platform to facilitate the business of our partners, so we try to keep that mantra very central to our entire in-house development effort.”
An expert highlighted how his platform has been working closely with the industry to enhance capabilities, solutions and relevance. “We know that digitising asset management and wealth management solutions is increasingly important, and we have been working closely with IFAs and EAMs who want to build their own portfolios and potentially robo-advisors as well,” he reported.
“As we provide the execution and custody for the majority of robo-advisors in Singapore through our OpenAPI,” he elaborated, “we are finding more and more IFAs looking to bring this technology into their own asset management arms, as well to provide this service to their advisory clients as well. Our open API and developer portal has well over 200 different API endpoints for data, client information, charting and so forth. Partners can build whatever they want on top of our OpenAPI. Their imagination is the only limit.”
Expert View - David Friedland, Managing Director, Asia Pacific, Interactive Brokers: “The structures we offer under a master account are flexible allowing advisors to customise accounts, use third party software via our open API and offer robust back office solutions.”
He explained that, in particular, he was seeing within the independent advisory and asset manager space a greater need for to build their own portfolios. “Accordingly, we have tools that allows them to build their own strategies, and then rebalance to all the underlying constituent clients that they sold that strategy to. That offers them more differentiation to complete more actively with the private banks, to close the gap on them in the whole area of bespoke portfolio curation.”
The sphere of end client review and analytics is an area of the platform proposition that many believe can be enhanced. “This is why we have gone into partnership with a leading FinTech, which has built an awesome engine for exactly this,” reported one platform head. “The collaboration with them will result in advisors having the tools they need to become far more efficient. We have actually gone externally for this, so we can allow the advisory companies to work with us without any fear that we will try and poach their clients; actually, we firmly believe that the information an advisor has on their clients should remain with that advisor.” Meanwhile, that particular platform can then focus exclusively on working with the FinTech to build a far more sophisticated advisor workstation which is 100% integrated into the platform’s execution, custody, valuation and risk management engine.
The final word went to a guest who pointed to the vastly different investment environment and economic environment ahead. “We have had 40-plus years of declining inflation, disinflation and rallies in bonds and stocks, so dealing with an environment where you potentially have to become much more inflation-aware, due to the vast swathes of government and central bank stimulus, would be a huge challenge. And for advisors, they are going to be more focussed on protecting their client’s portfolios from inflation.”
The greater capability and efficacy of digital technologies, software and computing power, combined with the business needs of the wealth management community and the end clients have helped propel the rise, and rise of the electronic execution & custody platforms. The battle the thrive is between some of them, and also between them and the traditional incumbents, the global and even regional private banks. There is no doubt that innovation will drive the platforms to become even more customer-centric and customer-responsive in the years ahead, building out their solutions, offerings and user-friendliness as rapidly as they can. And there is also no doubt that the incumbents, some of them armed with truly vast financial and other resources as well as mega-brands, will fight tough to retain their customers, and to win them back.