Just a short post, inspired by a piece I saw recently from a platform user. His thing was that other than trading, he used very little of the reporting or client management functionality that his chosen platform bundled in (he happened to use CoFunds but it could’ve been anyone).
Instead of relying on the platform provider, he was really getting the most out of his chosen back office system, which if memory serves was Intelliflo. He had kind words to say on how CoFunds interact with Intelliflo, and looked forward to being able to trigger trades on the platform from the back office when the two-way messaging got more sophisticated (again, other B/O systems are available).
This is a nice story on a couple of levels. First, this IFA has really got his proposition nailed and is using the tools he finds most appropriate to deliver his proposition to his clients. That’s kind of how it’s supposed to work, and it’s good to see it in action.
But more interestingly, here’s a guy that’s created his own value chain rather than relying on a traditional way of working. And it’s a value chain which even a few years ago seemed a very long way off to all but the most committed tech-hounds. I’ve had a shot at representing it below:
This might be right or might be wrong – it certainly isn’t as detailed as it would be if you were going into the process in depth – but most of the big bits are there. The thing that’s not there, of course, is a product provider as we currently know them. And, even if providers reinvent themselves as platforms, the one thing that this adviser doesn’t need is a richly-textured, content-heavy, fat provider extranet.
And this is what’s got me thinking. Quite a few lifecos are now rolling the dice in bringing their back books and new business propositions together on ‘a platform’ – that platform is a crashing together of their extranet and their new model new business proposition.
But what if, as a result of being able to trigger trades and control pretty much the whole process from the back office, the IFA can remove the provider from the whole equation? At that point, do provider extranets, whether plumbed in with e-messaging or not, become any more than waiting rooms for legacy business to wither away? Does that justify the millions – in fact tens of millions – that are being spent trying to change these platforms into integrated new / existing business delivery machines? What value does that prized bit of online real estate truly have? Why would advisers want to come?
In this view of the world, what we know now as a platform provider – whether a supermarket or a wrap, really does just become a place to source tax wrapper management, custody, dealing and administration. All of these are pretty much commoditised (perhaps bar admin – for now) and highly price-sensitive. And of course, if the back office can control the trading, pre-populate applications and deal with client management on a two-way basis, then the inefficiencies of using multiple platforms will disappear, proving a disappointment for those who espouse the mantra of ‘getting the pipes in’. Cross-sell / up-sell / book deals all become less likely and a lot of business cases will start to look pretty shonky.
And it might mean that the hoped-for gravitational pull of really, really cool provider extranets may not be as strong as the e-business teams developing them expect.
It’ll be interesting to see how it all shakes out. Watch this space…