Every month from our Wealth & Technology newsletter which covers bewteen 60 and 90 relevant news and developments from in and around the world of technology in the wealth management sector, we also pick out a few themes to highlight and summarise. From the May newsletter, we highlight four notable themes.   

The development of alternative asset investment marketplaces
In an era where traditional investment options have struggled to generate returns (when also considering the impact of risk, fees and inflation) and clients are more likely to be self-created and business owners, wealth managers have been seeking different options to deliver returns and engage and service clients. Many alternative assets, while relevant in this environment, have been simple inaccessible for the majority of clients due to their high investment minimums. In response, we have seen the arrival of numerous investment marketplaces as well a those specifically focused on alternative assets. This month saw London-based provider AtomInvest live launch after its beta phase. In the US, notable partnerships emerged between The Royal Bank of Canada Wealth Management in the US, working with Artivest, while JPMorgan Chase & Co has a deal to do similar with iCapital Network.

Amazon’s continued foray as a market enabler
While many continue to raise fears about Amazon’s entry (and other members of the so-called GAFA group – Google, Apple, Facebook and Amazon) as a competitive force in the wealth management space, its role as a partner to industry players and enabler continues to emerge. The Seattle, WA-headquartered digital giant has added its technological expertise, specifically related to its Alexa offering, to support product developments at both Envestnet and Fidelity. While these initiatives, and others with players such as as UBS, are still very much experimental, Amazon’s deepest entry into the sector so far is very much through other aspects of its cloud services unit, Amazon Web Services.

Major US data aggregators create SODA
In the, major data and data aggregation players joined forces to create joint industry initiative focused on developing something called the Secure Open Data Access (SODA) framework. SODA will identify standards that financial technology companies must uphold to enhance financial data security and create more transparency for consumers, financial institutions and policy makers. The firms involved are Envestnet Yodlee, Quovo and Morningstar ByAllAccounts who will work together with the Consumer Financial Data Rights (CFDR) Group. With GDPR now active in Europe, this initiative recognises the importance and power of data, the need for clear guidance to both providers and consumers and the risks for all if data is used inappropriately or accessed by malignant users. At the same time, the US’ Securities Industry and Financial Markets Association (SIFMA) also issued guidelines to its members around the use of use of data aggregation technologies.

The battle to replatform
In the last months, we have seen more than a few pieces looking at the challenges firms are having in replatforming. Technical challenges, delays, rising costs, shutdowns, lockouts, advisor dissatisfaction, these have all been on the agenda as players in the both the UK and US have suffered from their attempts to move from one large scale platform provider to another. It seems it does not matter the name of the firm or the technology provider, the issues and challenges seem almost universal. Without venturing into the deep depths of why these issues continue to arise, when we consider the industry’s need to revamp its legacy technology infrastructure (and other forms of legacy!), the need to develop a more agile environment, particularly around technology engagement and use, and the clear need to work more efficiently, the risks, costs and clear failures of some of these replatforming efforts highlight a risk to the industry. The industry needs a modern infrastructure, yet replatforming is represents a potentially damaging catch 22: replatform and suffer or don’t replatform and suffer!

Perhaps, similar to the SODA initiative above, this is an area where it is in the broader and longer-term interests of both the financial services/wealth management firms and the technology solution providers to come together to develop an improved replatforming methodology. Because, right now, they are not doing anyone any favours.

You can access the full newsletter for the month here: https://www.thewealthmosaic.com/resources/insights/wealth-technology-market-highlights-for-may-2018/