“Ob-La-Di, Ob-La-Da”

The big life companies jumped on the platform bandwagon, often using the same wagon maker, to offer open architecture but with the bonus of positioning their own fund ranges front and centre. Asset managers bought or launched platforms, again with an open architecture shop window, and their own investment solutions sat like the sweets located at the supermarket checkout. Continued growth of Managed Portfolio Services (MPS) as advisers focus on financial planning rather than investment management means the independent platform performs the same function as the provider of old – access to a readymade investment solution in a tax advantageous product with management of fee income, but perhaps with much better reporting.

It might be contentious, but I wonder if the disrupted market has settled down and we aren’t too far from where we started: platforms are now product providers.

When wrap platforms were first imagined in

Australia, they were supposed to become the central repository for a client’s ‘financial life’. The idea was that your banking, insurance, and investments would all be managed on a single “platform” that “wrapped” up your finances. In practice, platforms have become a mechanism for offering savings and investment products to retail clients, but no one has yet successfully used them to build the aggregation functionality which many conceived; for example, links to day-to-day banking and saving products. The retail banks are working towards that point, quite often through various incarnations of FNZ technology, but making everything visible to a customer through their banking app relies on the customer having all products under the one roof. Lloyds Banking Group have bought Embark, but the data proficiency needed to match independently advised clients on the platform with those who have a Lloyds bank account is not only complex but skirts dangerously close to the edge of data protection rules.

Before innovation labs started popping up all over the place the saying was that ‘necessity was the mother of invention’. As we face into a challenging economic cl imate for businesses that (almost to a firm) charge on according to value, the necessity will be to clearly target ways in which operational efficiency can be claimed. New proposition development is costly and as net new business gets harder to come by, I believe firms will be looking at how they can improve service outside of onboarding; doing this well can provide differentiation in the market, give better adviser and customer outcomes, and reduce administrative burdens.

Technology vendors such as Moneyinfo and Moneyhub can bridge this gap, but the process still isn’t simple for consumers or advisers. Digitisation and integration have leapt forward hugely in the last few years, triggered by global disruption, so we will see this accelerate as expectations are set. Initiatives like the Pension Dashboard and Open Finance will provide data standards and make competitors play nicely together and this should allow the level of access that all consumers (advised or otherwise) will need to readily, and digitally, engage with their financial life.

So where will platform market disruption come from next? There’s a debate rumbling around ‘adviser as platform’ which we managed to stoke in our recent whitepaper, but will commoditisation and ‘platform as a service’ finally see retail brands consider investment propositions in the same way they’ve approached insurance and credit? Maybe the consumer will drive the next disruption as they become more technologically enabled? Does the platform proposition win because it has simplicity of access all in one place even if it doesn’t offer everything the customer wants or will that same customer prefer to use multiple product providers if they get the right outcomes, and the right information is available to them?

I may be stretching the analogy with platforms, but the Sgt Pepper album was a defining moment in pop culture, has been hailed as an innovative force for song writing and production, and heralded the album era. While the album isn’t dead – Taylor Swift set a record for occupying all top 10 slots on the Billboard Hot 100, all of which came from the same album – streaming services have changed the way we consume music by giving consumers access to a wide range of songs, and curated playlists, from multiple artists.

There’s probably a whole other blog about financial services and Taylor Swift deciding to control the quality of her product by taking capability in-house, apart from distribution to consumers where there is reliance on agents like Spotify and Ticket Master. But that’s for another day.