Saxo Market's Asia Pacific CEO, Adam Reynolds, told finews.asia that private banks and wealth managers shouldn’t waste time and hundred of millions of dollars building product platforms from the ground up and focus on their real strengths instead.
Even with strong IT talent on board, banks face a number of headwinds in reaching a desirable outcome when attempting to build various parts of their digital infrastructure.
This includes developing the most basic parts of product platforms, such as merely executing a trade or custodizing a security. In addition, the financial sector’s largest institutions have had a legacy of organizational siloing on an asset class basis which has led to inefficiencies beyond just redundancies from the desire to own your resources.
«Organizationally, banks are traditionally built as asset class silos. They will spend $100 million on an FX tech project here and another $100 million on another asset class with totally different solutions that cannot be easily integrated with one another,» explained Saxo Market's Adam Reynolds in a conversation with finews.asia.
«Even banks that have strong trading platforms for these individual asset classes have difficulty delivering a strong wealth platform.»
Advisory IT
Reynolds stressed that whilst building an optimal multi-asset class platform was no easy feat, it makes no sense for wealth managers to develop execution, custody or valuation capabilities in-house. But far from proposing banks to cut IT headcount, he emphasizes the need for them to focus on their organization’s true strengths: advisory.
«We don’t want to be advisors ourselves. We want to support advisors, be it IFAs, insurance companies or banks,» he said, suggesting greater focus on leveraging technology to develop custom tools that could improve user-friendliness or generate more investment activity.
«Their expertise is in delivering solutions to meet clients' risk and return goals or building effective user interfaces. We empower them by plugging them into the market.»
FOs and Robos
Saxo launched «Saxo Investor» investment management tool in Singapore in March and has since doubled its regional client base varying demand including from the ultra-rich and family offices, highlighting that whilst a bigger share of their wealth may reside with banks, much more activity is conducted with Saxo Markets sheerly due to superior pricing.
«I’m cautious about non-bank players but in our space, I think they are less likely to have an impact in the next two to three years,» he said, adding that the current focus is on payment and lending.
«In fact, we are in discussion with some of the big names that don’t have market access and they’d rather use us for open banking architecture.»
The Saxo Investor platform was recently enhanced with the addition of a mutual fund offering and will look to launch in Hong Kong early next year.
