We talk to a firm with strong views about the "democratising" power of cloud-hosted Software-as-a-Service in the fields of foreign exchange and capital markets.
Cloud computing has gone from sounding like an obscure term to one that any manager, let alone C-suite figure at a wealth management house or private bank, should know about. And yet the ways it can affect the industry for good or ill are still not always understood.
This news service recently spoke to Vikas Srivastava, chief revenue officer, Integral, a Silicon Valley-headquartered technology firm that has built a Software-as-a-Service (SaaS) offering, and works with more than 200 financial firms. Srivastava argues that SaaS solutions can be a “democratising force” for firms operating across the spectrum of FX and capital markets globally. The argument is that such tech gives smaller institutions the kind of resources which were once the sole preserve of big players in Wall Street or the City.
WealthBriefing: 2023 has been a year characterised by
opportunities and new-found risks for wealth management firms.
Can you outline some of these in more detail?
Vikas Srivastava: While grappling with slumps in growth, high interest rates, and bouts of severe market volatility, the industry has no option but to evolve to meet the changing needs of their customer base.
Currently, wealth managers are riding a wave of new industry trends. As the client demographic shifts, customer experience always remains a critical consideration. A recent report by Cerulli Associates, showed projections that the wealth transferred through to 2045 will total $84.4 trillion. As a direct result, the generational wealth transfer is seeing younger investors establish new relationships with their wealth advisors. Used to dealing with technology for all aspects of their life, they expect the best and most efficient service from those in charge of their portfolios. In addition, they are also turning their attention to new asset classes, such as digital assets and cryptocurrencies.
In the immediate aftermath of the FTX fallout, the cryptocurrency market underwent significant change, equivalent to years of innovation for other asset classes, in the space of just two weeks. Of course, the growing pains of crypto are all part of the evolution of the asset class. Whether you believe cryptocurrency valuations are going up or down, market participants certainly see a future with digital assets, and as a result there is a need for more robust market infrastructure and technology to serve this. Risk management is going to be a key factor moving forward.
What should firms in the wealth management industry be
doing to navigate these?
Vikas Srivastava: To meet these changes, firms need to adapt their strategies and services accordingly, to streamline operations and ensure that they can provide cutting-edge investment opportunities in a way that matches up with the needs of their increasingly tech-savvy client base. To stay ahead, private bankers and wealth managers need to realise the potential of technology, reaping all the benefits of automation without the significant costs of having to build their own infrastructure in-house.
Key industry drivers, such as digital transformation, are now having significant impacts on the industry. As part of this, and shown by the survey from Publicis Sapient on the Future of Cloud in Banking, many retail and commercial banks have big ambitions to increase the number of applications and data that are hosted in the cloud. This signals major acceleration, compared with the pace of adoption over past years.
The cost-benefits of adopting cloud technology are well known now, namely propelling innovation and reducing the total cost of ownership. Many in the wealth management and private banking space should be viewing this as the strategic next step for their business.
What are some of the benefits that this type of
technology can bring to firms?
Vikas Srivastava: From a macro perspective, cloud-hosted SaaS can act as a democratising force for firms operating across the spectrum of FX and capital markets globally. Why? Because it is synonymous with agility and flexibility. The lower costs, coupled with high-quality technology, enable regional and national institutions to compete and win on a global scale. Each institution, no matter what its size, ends up with access to technology usually found at tier 1 Wall Street institutions.
SaaS easily accommodates workflows to meet unique business requirements, while also maintaining rigorous standards to meet technology needs in a timely and efficient manner.
There is certainly room for growth – technology providers can help companies in the private banking and wealth management space to maximise operational efficiency and better serve their existing customer base. Relying on flexible and scalable SaaS technology, smaller and traditional organisations can realise the benefits of institutional grade technology to navigate new and increasingly complex customer requirements, from sourcing the best FX rates intra-day to automating their risk management capabilities. Only with SaaS technology can wealth managers gain a competitive edge, modernising operational processes and ultimately growing their business along the way, at a fraction of the price of building their own infrastructure.