Written by David Henderson on Thursday 24 October 2013
The withdrawal of big name high street banks from the advice market seems to have generated renewed activity in the D2C platform arena recently. YourWealth has launched a platform to take advantage of another wave of customers who may move towards D2C when they discover they now need to pay explicitly for advice, the next time they meet their advisers. Aegon has recently announced that they intend to launch a D2C platform for orphaned clients and those advisers no longer wish to service. And reports in the press suggest that several more organisations are actively looking at this space. All of this leads to a logical conclusion for anyone who has historically been reliant on commission based distributors to sell their products and services; they need a D2C platform.
So how do you go about building a new platform? You could go for technology from one of the big boys in the platform software space, Bravura, GBST or FNZ and then add a few extra bits to cover any gaps or weaknesses. Or you could go a la carte and plug together the best available components directly. For either option, but especially the second, having a good understanding of the business capabilities and processes of a platform will be essential; they are the blueprints for the organisation.
The blueprints, or architectural frameworks, provide a structure for understanding requirements and testing potential solution designs, from these you can start to form your assembly instructions. So once you know what you are building, what type of components might you include in your platform? Well you’ll need a front end for the customers to use, a backend to deal with custody and product rules, a way of getting assets on and off the platform and a host regulatory compliance tasks.
There are a plethora of companies offering front end software for banking websites; it’s not a massive stretch to believe these could be adapted for use as a platform front end. After all, displaying account details, transactions and product balances would be pretty similar albeit some tweaking and integration would be required. However the big draw should be the things that have already been done, things like dynamic multi-device (mobile, tablet & PC) support, security and authentication models, customer experience segmentation, customisable branding, personal financial management features and scalability. The list goes on, these are great features to have and they’ll need to be customised, but they are not really things you want to spend time and money developing from scratch.
Complex components that could be too risky or costly to build yourself are another area to consider; things like model portfolios support, reconciliation tools or transfers functionality. I’ve heard stories of initial estimates for building these being out by a factor of 10 by the time the specs had been written! Or you could just buy a distinct component designed and build for the purpose; there are several companies offering plug-in model portfolio and reconciliation software, plus a few players with transfer solutions.
The use of existing components may allow you to get a platform up and running in time to capitalise on opportunities that arise for your business. Using these to provide standard utilities and/or complex functionality, you can then focus any development effort on differentiation and supporting unique propositions.