Asset management as an industry is becoming more and more independent of where assets are booked. In a recent report by Credit Suisse, it was reported that external asset managers (EAMs) have relationships with an average of six custody banks – with some having up to 40. It is therefore essential for EAMs to be able to manage wealth booked in different custody banks. The same can be said for banks with asset managers who are keen to offer a 360-degree service to their current clients and attract new, sophisticated ones.

Market needs

In this environment, achieving a consolidated view of a single wealth client is crucial for delivering value-adding, competitive and ultimately successful wealth management services. However, this work is cumbersome, delicate and expensive. The main reason is that the industry has not yet adopted a standard for interchanging positions and transactions. Each custody bank has its own protocol, sometimes inspired by overall standards (like SWIFT), but in any case, with its own specific “interpretation”.

Competing in asset management nowadays meaning providing a robust mechanism for the consolidation of client positions and the correct calculation of the overall performance with drill-down possibilities to single positions. Delivering such a “concentrator” service will allow the front-office staff to concentrate on the client offering instead of getting absorbed by clerical work.

Avaloq vision

Avaloq has powerful wealth management tools and is providing a new digital experience to maximize value for wealth managers. We enable excellent wealth management services by offering:

a) an excellent user experience, delivered on a digital platform focused on the wealth management role;

b) powerful, reliable, scalable and complete client and portfolio management functionality, enabling new client segments (for example, mass affluent) to expand their services;

c) data analytics that support new business discovery.

To complete the vision, we will provide the wealth management platform as a BPaaS (cloud-based) solution that smoothly integrates the different ex-custody information. Most of the major asset management custody banks will be available for interfacing, which will keep time to market to a minimum. In this way, we’ll achieve the following objectives:

1) Developing a wealth management platform that is able to handle a multi-custody environment, so that our clients and bank-based asset managers can offer a full range of services.

2) Allowing Avaloq’s clients to offer a complete multi-custody solution to their EAMs as a means of attracting more assets and increasing business in this key area.

Roadmap

Avaloq is setting up a partnership with a third-party service vendor to deliver its multi-custody solution that will provide the capability to interpret and verify the different ex-custody bank flows for consistency and ultimately feed the data received into the Avaloq Banking Suite. This data will then be integrated and used to update the positions and performance of each ex-custody portfolio, so that client consolidation happens automatically in the wealth management tool.

Avaloq chose a partner at the end of 2019 and is currently designing the technical solution and the service parameters. Implementation and general availability is planned for the first half of 2020.