At the core of an intermediary’s current application landscape is an integrated wealth management system, often an off-the-shelf third-party solution. These systems encompass a range of functionalities including CRM, KYC, portfolio management, investment advisory, order management (OMS), custodian data consolidation, client reporting, and fee management.
To remain competitive, modern systems must be designed with seamless integration capabilities, allowing for easy incorporation of third-party solutions such as client portals, risk engines, and ESG tools through application programming interfaces (APIs).
By making the right selection, intermediaries stand to gain numerous advantages, including:
Reducing operating costs and enhancing efficiency: One of the main challenges faced by intermediaries today is the cost associated with connectivity between their wealth management systems and custodian banks. However, with the ongoing adoption of Open Wealth API standards by Swiss market participants, it is anticipated that licence fees will decrease in the medium to long term. This reduction in unit costs for connectivity opens up opportunities for intermediaries to expand their network of connected custodians, thereby achieving higher operational efficiency.
Moreover, by implementing an operating model strategy that incorporates business process and IT outsourcing, cloud computing, robotic process automation (RPA), and straight-through-processing (STP), intermediaries can further drive down operating costs while streamlining their operations.
Mitigating risks: Regulatory compliance is a significant driver for technology adoption among intermediaries. Wealth management systems equipped with built-in online validations, compliance workflows, and audit trails ensure that risks are effectively managed and compliance requirements are met. From suitability and appropriateness checks to pre- and post-trade validations, these systems play a crucial role in safeguarding against potential risks.
Enhancing productivity: Despite recent technology investments, research indicates that private bankers still spend a substantial amount of their time (approximately 60%-70%) on administrative tasks such as client reviews and document processing. Given that technology investments by intermediaries have been relatively modest, it is reasonable to assume that relationship managers within these firms face similar challenges.
Staying ahead in a dynamic market
While custodian banks continue to enhance their digital offerings to optimise vertical efficiencies and improve customer experiences, technology vendors should explore opportunities to develop ‘horizontal’ solutions. These solutions would enable intermediaries to reimagine the client lifecycle and investment management across multiple custodians, fostering a multi-custody cockpit. By integrating events, notifications, alerts, and tasks generated from external sources (e.g., custodian banks) and internal systems (e.g., portfolio management systems), intermediaries can orchestrate omnichannel collaboration between themselves, their end-clients, and custodian banks.
The future of external asset management lies in embracing technological advancements to unlock operational excellence, reduce costs, mitigate risks, and enhance productivity. By leveraging integrated wealth management systems, intermediaries can optimise their operational efficiency, enhance client experiences, and stay ahead of the evolving industry landscape. As the industry embraces the next frontier of Open Wealth, intermediaries have the opportunity to transform their businesses, drive innovation, and seize a competitive edge in an increasingly dynamic market.