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Investment platforms must get back in the game

I recently read a thought provoking article by Klaus Schwab, called ‘The Fourth Industrial Revolution: what it means, how to respond’. At the beginning of the article Schwab describes the first three industrial revolutions, which I think we’re all fairly familiar with:

1784 – steam, water and mechanical production equipment

1870 – division of labour, electricity and mass production

1969 – electronics, IT and automated production

The majority of the article is centred around a fourth digital/technological revolution, which the author says is currently evolving at an exponential rate, rather than the linear pace of the first three revolutions. Schwab says “The possibilities of billions of people connected by mobile devices, with unprecedented processing power, storage capacity, and access to knowledge, are unlimited. And these possibilities will be multiplied by emerging technology breakthroughs in fields such as artificial intelligence, robotics, the Internet of Things, autonomous vehicles, 3-D printing, nanotechnology, biotechnology, materials science, energy storage, and quantum computing.”

We’re clearly in the middle of a very exciting and hugely significant period of change and the article got me thinking about the digital/technological changes that I’ve experienced in my life.

My love of technology started whilst growing up in the 1980s, with things like the VHS video recorder that my Dad rented from Granada, my Casio calculator watch, the Atari games console that ignited my Mum’s Pac-Man addiction, my first Sony Walkman and of course, the obligatory ZX Spectrum 48K computer!

Over the next twenty years or so, technology advances really started to pick up pace, thanks to personal home computing and the growth of the internet. From my perspective some of the best technological innovations included CDs, Nintendo games consoles, laptops and of course mobile phones.

12 years ago my career took me to Cofunds, an investment platform now owned by Legal & General. At Cofunds I can now see that I was actually working for a pretty exciting fintech company, although I don’t think the term ‘fintech’ had been invented then. At the time there were only a handful of other companies trying to harness technology to revolutionise the way advisers and investors could manage their fund portfolios.

When I think about how the digital/technological revolution has moved on since 2004, I’m actually left feeling a bit frustrated with the lack of progress from the investment platforms that were changing the face of the fund industry over a decade ago.

Since 2004, other industries have chosen to embrace the fourth industrial revolution unlike those early pioneers in the investment platform space. Apple has launched the iPhone (2007), the iPad (2012) and Apple Watch (2015). In the last 10 years the way we live our lives has changed beyond belief – for example the way we communicate with friends and family (Facebook & Twitter), search for information (Google & Wikipedia), shop (Amazon & ebay), watch TV (Netflix), order a taxi (Uber) and rent holiday homes (Airbnb).

When I look at investment platforms today, I really don’t think anything has significantly changed since I first started working in the industry. The newer entrants, even those that love taking a swipe at the so called ‘legacy’ providers, offer essentially the same functionality that existed over 10 years ago.

The investment world, and in particular investment platforms, must find a way to keep pace with the fourth industrial revolution, because their customers are embracing digital change in almost every other part of their lives. Investment providers need to think differently and this means they should be trying to find ways to enhance the customer experience digitally.



Comments: (4)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 08 February, 2016, 08:54Be the first to give this comment the thumbs up 0 likes

Agreed. I moved my stock trading online as soon as - a subsidiary of the leading ICICI Bank - launched in circa 2000. Since then, the platform has expanded to include many more asset categories e.g. IPO, Mutual Funds, etc. However, in 15+ years, I've noticed very little by way of features that deliver an enhanced CX.

A Relationship Manager from the company called me around a year ago. Noticing that my trading volumes have dropped in the recent past, he offered to slash his brokerage. I assured him that I haven’t even noticed his charges, and promised to double my trading volumes – with no reduction in brokerage – if only his company gave me proactive buy / sell / hold advice through a native mobile app. He promised to pass on my feedback to his management. I haven't heard from him since then.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 08 February, 2016, 09:33Be the first to give this comment the thumbs up 0 likes


Unfortunately, fintech (i.e. nonbank) investment platforms suffer from a lot of friction, as I'd highlighted in Banks Have Nothing To Fear From Neobanks. As a result, I wonder if bank-owned investment platforms have too much incentive to find ways of enhancing CX.

A Finextra member
A Finextra member 08 February, 2016, 09:57Be the first to give this comment the thumbs up 0 likes

Hi Ketharaman. It's interesting that your relationship manager offered to slash your fees. UK investment platforms have tended to focus on price-cuts rather than improving the customer experience. As a result, margins are now so thin that investing in the UX is too painful for many, especially as they have back-office technology problems to fix as well.



Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 08 February, 2016, 11:40Be the first to give this comment the thumbs up 0 likes

@JeremyMugridge: Looks like the situation is the same in India and UK! I agree that investment banks owned by traditional banks have to contend with legacy backoffice issues. That said, nonbank owned investment platforms also have their own problems - e.g. seamy interface with funding sources - that are arguably tougher to solve since they're outside their control.