This publication recently spoke to K2, which provides clients with a business process application platform and solutions. It is confident the wealth management industry will create many opportunities.

K2 is the name of the world’s second-tallest mountain and it is also the moniker of a software vendor which provides its clients with a business process application platform and solutions. Last year it secured important private equity funding of $150 million. The funding will enable K2 to further its vision of empowering its customers to make the most from their business processes and build and run their own unique business applications on-site and in the cloud. And as wealth managers sweat to keep up with new client and regulatory demands, K2, launched in South Africa in 1998 and is now operating in over 80 countries worldwide, sees itself as in a great place. It is headquartered in Redmond, Washington.

It may seem like a cliché these days but the old mantra “adapt or die” is as true of wealth management as it is of other business sectors. From household goods to luxury hotels, industries are being shaken up by technology in all forms, whether they be “robo advisors”, Big Data or mobile devices.

An issue for many wealth managers, especially those outside the ranks of the largest players such as UBS or Morgan Stanley, is that spending money on in-house systems can be prohibitively costly. A recent study by Scorpio Partnership, for example, showed that while cost/income ratios for the largest wealth managers slipped a touch in 2015 to 75.1 per cent among the largest firms, ratios are nearer 80 per cent. And such issues turn more pressing when “robo-advisors” and other upstarts are snapping at one’s heels.

Such considerations raise the question of what wealth managers can do to address these challenges through automation, but at the same time deliver a credible return against any investment in new technologies. This is where K2 comes in.

To highlight the urgent mood of the market, K2 refers to a 2013 study from the MIT Sloan Management Review survey, which revealed that 63 per cent of business managers and executives questioned said the pace of technology is too slow for today’s competitive business environment; 78 per cent said achieving digital transformation will become critical to their organisations within the next two years.

K2’s platform is available as an on-premise or cloud-based platform to help deliver the clients’ digital strategy.

The firm says its goal, in the words of account executive Brian Farrelly, is “to engage with clients whose operations span many offices who have either hit or breached an operating model limitation and need to rapidly build and deploy scalable and flexible business applications to support future growth and drive operational efficiencies”.

One example of the client challenges that K2 deals with is AXA Wealth. The business had been automating core workflows; productivity rose, but there was room for more gains as many of the company’s processes still relied on manual interventions, and managers had no insight into why these manual steps were necessary, where the bottlenecks were,  how often they occurred, or what time was lost as a result.

Across the business, there were five different workflow systems, and this lack of consistency further obstructed management’s visibility. AXA Wealth chose K2’s platform, saying that it liked how it slotted into the wealth manager’s Microsoft development environment. AXA Wealth’s Elevate business unit has developed more than 50 workflow apps that automate process and functions such as recording power of attorney, amending direct debit instructions and claims payments (the kind of unglamorous functions that one usually notice when they don’t work). At peak times, the Elevate business unit had to handle more than 1,000 tasks a day but now have been replaced by 50-plus new apps which introduced two important new enhancements. Firstly, the K2-based solutions provided highly detailed data to enable the production of reporting about the duration of specific tasks within processes. With this insight, managers can now identify bottlenecks and take action to improve process efficiency even more.  

Nimble
At a recent Breakfast Briefing organised by this publication – with K2 as the sponsor - Toby Hayles, head of UK and Ireland sales at K2, spoke about the importance of his firm’s “agility”.

“Modern business history is littered with examples of businesses that have disappeared completely, in sectors like publishing, retail, music and travel, because technology has fundamentally changed their market. There are many barriers to change, but from a technology perspective systems and processes can be significant, costly anchors to legacy ways of working,” he said.

A challenge, he said, is that firms can be hobbled by excess reliance on outdated core platforms that were created when relationships were primarily built and managed in-person. As a result, they have limitations. These problems can be overcome either by the expensive route of building a core platform with new capabilities or by plugging in layers of technology and applications to make the most out of data and automate basic processes.

Hayles argues that there is plenty of room for more digitisation, such as converting paper-based records to digital versions. This transfer allows users to aggregate data and see trends and themes, not to mention shrink expensive storage space and save the building costs. Another area of simple but effective change is to move opaque email communications, used to manage processes, into structured business process applications designed in K2. Such a move makes tasks of each process more visible, auditable and with state for all to share. Hayles also mentions what is called “end-user computing” (EUC) data loss. This is information that is held in spreadsheets, local data stores, and personal data sources which can become far more valuable if it can be leveraged and integrated into the core enterprise systems. The K2 platform offers users the ability to integrate their EUC data during the execution of the business process.

These are some of the issues that K2, whose origins date to South Africa in 1998, is dealing with. Having so far reached the giddy heights of employing more than 500 people and serving more than 1.5 million users, the first 18 years of this firm’s existence have been anything but dull. Recently, K2 moved their HQ to new offices in Seattle. With pressures of regulatory compliance, efficiency and time-to-market remaining intense for wealth managers across the globe, they should provide K2 with plenty of reasons to prove its relevance.