Wealth management firms have long recognized the need for comprehensive solutions that digitize operations to increase efficiency, productivity and profitability. After investing countless resources over the years, these efforts have come with varying degrees of success.
Historically, the financial services industry was dominated by wirehouses, large independent broker-dealers and custodians, who each built their own legacy “all-in-one” platform. For years, this one-size-fits-all approach worked well enough for their financial advisors and clients—but times changed.
As the industry evolved to include more independent players, localized dissatisfaction with various aspects of pre-defined platforms grew. Additionally, growing gaps in these offerings, identified through changing customer and advisory demands, made the “all-in-one” platform seem less than advertised.
In today’s crowded and rapidly changing marketplace, financial services institutions looking to achieve scalable back-office operations look beyond the traditional choice of either an all-in-one technology solution or an array of personalized plug-and-play products. want. A middle-ground approach that focuses on technology providers providing a “best-in-one” platform may be a better solution.
Push back against an “all-in-one” approach
As wealth management moved to a more independent model, financial advisors emphasized the traditional top-down approach and wanted the flexibility and autonomy to choose the best solutions for their businesses. The industry had to determine how to integrate these different tools with their platforms, providing an opportunity for early fintech companies to create innovative personalized solutions. This was especially true for tech-enabled client-facing and investment management activities, and to a lesser extent for back-office operations.
The approach resulted in firms offering a patchwork of technologies with some degree of integration. Back-office operations were not untouched by these changes, with a lack of integration being an ongoing problem. In other words, the pendulum may have moved too far in the stand-alone technology direction and today’s money management firms want to fall back on the middle – what we call the “best-in-one” solution to deliver better results. Huh.
While firms know their advisors are left frustrated by the lack of deep integration of their favorite stand-alone tools, going back to a full “all-in-one” platform for back-office operations can be prohibitive. If a firm decides to purchase a new “comprehensive” solution, work is only just getting started, as the company needs to determine how many, including new account openings, workflows, CRM, custodians, compensation, supervision and monitoring. How to integrate systems.
This is where a “most-in-one” technology provider can be effective.
The Rise of the “Most-in-One” Option
Experienced financial services technology providers have begun to stake the middle ground. By focusing on what they do best, these providers have rounded out their core solutions by adding a rational ecosystem of complementary tools or by making strategic acquisitions to round out their offerings. Firms that require a faster, more secure back-office will be best served by this option.
Using an experienced provider who has most of what is needed to run an efficient back-office, and knows where to get the rest, can be a game-changer. Firms can rely on these providers to ensure integration of equipment and systems, pushing for additional solutions as needed. This removes a huge burden from the shoulders of CTOs and COOs who have a better time running the business.
Using a “most-in-one” provider can also reduce the number of relationships, service-level agreements, and contracts that a firm needs to maintain, as vendor consolidation is a major factor in the industry. The trend remains.
The emergence of a “most-in-one” player is part of the wealth tech space’s ongoing maturation. The goal is to simplify the process and increase back-office efficiencies. Experienced players in this middle ground know what today’s independent landscape looks like and understand where the industry is headed, the need for automation and AI-enabled solutions in times of industry disruption and consolidation.
Truth of cliché: Firms need a partner, not a seller
Firms looking for a “most-in-one” solution need a provider who can be a partner, not just another vendor. A valued partner will have years of experience in delivering key technologies and products developed to meet changing needs. A true partner understands that technology is not just about bells and whistles, it is also about providing solutions to make businesses more efficient and effective.
Collaborating with the right partner, a “best-in-one” approach to your back-office technology needs can be the most cost-effective, scalable and user-friendly way to solve your firm’s operational challenges.
David Notch is the Chief Executive Officer of Dokupes.