Ask any advisor and they’ll tell you that the biggest complaint they have about their technology solutions is that they don’t work well together and therefore require manual intervention throughout their processes and workflow. For this reason, many businesses lack capacity, cannot scale, and leave growth opportunities on the table.
It’s not a new phenomenon – and it continues to plague the wealth management space, as it has for decades – despite numerous advances in technology and the efforts of industry leaders to create unified integration environments.
TD Ameritrade Institutional’s award-winning efforts in building its Veo open architecture system, the first iteration of which was released more than a decade ago, have come the closest the industry has come to solving this problem. Veo showed great promise in sharing APIs directly with third-party advisory technology software providers to create integrations with the underlying accounts and data needed for the core systems that advisors use to process business and service customers. However, due to the continued consolidation of advisor technology, it appears that Veo will be phased out and parts of the platform will be transferred to Schwab’s systems by 2023.
What TDAI has created with Veo is what other industries call a “digital ecosystem.” A digital ecosystem is a group of interconnected computing resources that can function as a unit. Digital ecosystems are made up of vendors, customers, business partners, applications, third-party data service providers, and all of their respective technologies. Interoperability is key to the success of the ecosystem.
Digital ecosystems are frequently created and controlled by market share leaders and rapidly influence change in many industries. The integration of business-to-business practices, business applications, and Data within an ecosystem allows an organization to control new and old technologies, while building automated processes around them to constantly grow their business and weed out competitors.
This approach is a strategy that TDAI was not alone in pursuing. Following this venture, Schwab, Fidelity and Pershing each launched their own initiatives. And Pershing, with its recent announcement of “Pershing X”, announced another. Others, including tech-powered TAMPs such as Orion, Envestnet, and SS&C, have all attempted in different ways to control the advisor tech ecosystem through acquisitions, strategic partnerships, and bundled offerings.
The problem with these custodian and TAMP-led projects is that they are all competitive in nature and exclusive to this platform, designed to bundle the activities of an advisor…that’s why they only work with accounts and data from this platform. This is a popular strategy to try to lure businesses through their technology channels, create a competitive wedge, and attempt to control the advisor’s office. The reality for advisors, however, is that they are independent for a reason and want their technology to be independent, too, and not dependent on any third party. Advisors also use multiple custodians and TAMPs, have existing technology they have already invested in, and may not or may not always use preferred technology partnerships that platforms have pre-selected for their integrated offerings.
What is needed is a new approach to creating digital ecosystems that advisors can design and host themselves, so that they can own their own data and integrate the systems and tools that best fit their value proposition, tailored to their needs. In other words, a Veo-independent version of TDAI that advisors can own and build for themselves, without depending on anyone else.
This is what large institutions are doing by creating their own technologies that run their businesses and which historically were only accessible to mega-corporations due to the enormous costs and infrastructure required to develop and operate them. The good news for advisors today, however, is that with new advances in technology through cloud-native platforms, the ability to build your own digital ecosystem is now possible at affordable prices, with a stake in the much faster to market and more scalable than ever before.
The concept of “integrated digital ecosystems as a service” is a new approach to customizing an advisor’s technology that holds great promise for integrating any third-party application into your own ecosystem and customizing it to suit your needs.
Thanks to an integrated digital ecosystem, advisors and financial institutions can digitally transform their legacy proprietary applications, outdated third-party integrations, and complex business processes by avoiding the costly pitfalls of failed digital transformation projects and providing these businesses with a robust technology framework and set development tools to quickly scale and customize and create a single, unified, cloud-native user experience across the entire wealth management value chain.
Essentially, enterprises are able to create their own “application stores” that they control, select, and can seamlessly bundle into an integrated framework and environment.
Just think how this can transform your business, finally allowing you to have automated workflows, seamless integrations with your various software solutions, TAMPs and custodians, all personalized, owned and controlled by you, the owner of the ‘business.
You will gain the scale and ability to grow your business and ultimately digitally transform your business. Especially since the industry is becoming more complex, competitive and consolidating daily through mergers and acquisitions, leaving you with fewer and fewer options. Now is the time to finally own your independent tech destiny.
Stay tuned for the next article in this series where I’ll provide more details on the underlying methodologies and technology that power an integrated digital ecosystem and how you can deploy this powerful technology in your business.
Oleg Tishkevich is CEO and Founder of INVENT, a cloud-native technology platform focused on the wealth management industry.
