A time of change and challenges

Roadmap24

As the long aftermath of the financial crisis starts to fade into memory, banks and wealth managers are facing new challenges.

Digitalization, the rise of fintechs and new, disruptive business models are already changing the rules of the game, and the entry of the global tech giants into the financial services market promises major upheavals. Established financial institutions around the world know they will have to reinvent their businesses to survive and remain relevant.

Margins are already feeling the strain. The costs of patching up and operating fragmented legacy IT systems are increasing all the time. Regulatory requirements are becoming more demanding and constant investment is needed to keep abreast of fast-changing technologies.

At the same time, pressure on fees is eroding the top line, markets are being opened up to competition and noisy newcomers with highly efficient digital business models and attractive, consumer-style user interfaces are making their presence felt.

As the client base for financial institutions shifts with the passage of time, wealth is passing to Generation X and Gen Y, to clients who have grown up in a digital environment and who will demand an ever more appealing, convenient and fully integrated end-to-end digital experience across all channels.

Convenience and efficiency

These two imperatives – the user’s demand for a quick, convenient and enjoyable client experience and the bank’s need for efficient, highly automated services – have informed and inspired Avaloq’s exciting progress in 2019.

  • Convenience, usability and a great user experience have been key factors in the design and development of our product portfolio. Both business users and bank clients can get more done when they have easy, uncluttered access to the services and functionality they need. Avaloq’s goal is to provide highly personalized advice and bespoke services where that will help the client, while making banking processes invisible wherever possible (e.g. when a client order is being executed).
  • Efficiency is not just about making IT operations run smoothly and deliver services effectively. Our aim is to eliminate the time and effort wasted on activities that don’t add value and to use automation – including integrated software, RPA and artificial intelligence and machine learning techniques – to remove the need for manual intervention in almost all back-office processes. Users will be able to focus on high-value tasks and clients will enjoy a faster and more flexible service that gives them the answers and advice they want.

The themes of convenience and efficiency underpin all our latest developments. We follow six major principles here:

  • Digitalization – We believe in digital interaction, clearing away the bottlenecks of manual intervention, integrating AI and adopting automation wherever it will add value. As well as cutting costs, digitalization opens the door to new opportunities and business models.
  • Cloud – We believe cloud technology offers the potential to deliver huge cost and efficiency advantages for our clients. We are committed to providing fully cloud native services and products that are genuinely cloud agnostic.
  • Sourcing – Through our SaaS and BPaaS offerings, we enable our clients to share the cost and scale benefits of our world-class service delivery and enjoy immediate access to leading fintech innovations.
  • Data – We provide end customers with individualized bespoke services and new investment insights by exploiting the full potential of data, AI and analytics, generating new revenue streams and creating new opportunities for banks to grow their business.
  • Collaboration – We combine our own world-leading products with the innovation potential of our ecosystem (via open banking, APIs, avaloq.one and Avaloq Ventures) to lower banks’ costs and reduce risk.
  • Democratization of wealth management – We enable our clients to scale their services and grow their business by making profitable wealth management services available to a wider range of clients than ever before.

What have we achieved in the last 12 months?

  • With the launch of avaloq.one, we have laid the foundation for the banking and wealth management ecosystem of the future. avaloq.one brings together banks, fintechs, developers, implementation partners and investors to cooperate, innovate and lead the evolution of the industry.
    • Financial institutions get access to fintech innovations and a range of proven implementation partners.
    • Fintechs get access to new client segments and funding via Avaloq Ventures.
    • Partners get exposure to the whole Avaloq community, leading to more business opportunities.
  • Open APIs are the foundation stone that makes our ecosystem possible. By late 2019, we had published over 300 open API endpoints. Fintechs and clients can use these open APIs to integrate quickly and easily with Avaloq’s core banking, without the need for detailed Avaloq know-how. Our teams are working hard to expand this open API offering and add new functionality.
  • We are pressing ahead with our DLT and blockchain activities, in line with our ambition to reinvent banking for a digitalized world. In 2019, our first client went live using the Avaloq Crypto Trading solution. This enables clients to integrate cryptocurrencies seamlessly and securely, alongside traditional currencies, while making sure all the specific requirements for crypto trading are taken care of.
  • As pricing comes under closer scrutiny and price negotiation becomes more common, we have launched a new Cost & Fees Analytics solution to complement our existing Cost & Fees offering. This uses powerful data analytics to help banks and wealth managers assess the impact of bespoke pricing for individual clients and improve the overall client experience. It allows banks to design and control revenues with greater precision and helps them respond to regulations such as MiFID II and FIDLEG, which insist on full audit trails for client fee calculations.
  • Avaloq’s aim is to give users the powerful, easy-to-use tools they need to excel in their jobs and please their clients. To improve user experience, we are adopting a persona-driven approach to designing our newest products. The Financial Intermediaries Workplace released in 2019 is our first fully persona-driven product, closely tailored to the role of financial intermediaries and offering a fine-tuned set of tools and interfaces to make routine actions quicker and more efficient.
  • Regulation continues to be a big item on every client’s agenda, with the European Payment Services Directive 2 looming particularly large in 2019. We have successfully released a PSD2 offering based on our containerized microservices architecture, giving Avaloq clients a fully compliant solution that can be implemented with minimum effort.
  • All of Avaloq’s software is fully cloud agnostic and can be operated on most public and private clouds. In 2019, we introduced a software-defined data centre (SDDC) model, based on IBM Cloud, that directly benefits our clients by significantly improving efficiency in our SaaS and BPaaS offerings.

These landmark achievements in 2019 are reflected in the excellent financial results Avaloq reported for the first half of the year.

What happens next?

The big news to come in the first half of 2020 is the release of our brand-new platforms, Avaloq Wealth, Avaloq Engage and Avaloq Insights.

As announced at our community conferences in 2019, we will see the first release of the new standalone wealth management platform, Avaloq Wealth. This provides the new functionality needed to allow clients to widen and scale up their advisory business, while still offering the high level of personalization required for upper client segments.

Avaloq Wealth makes the democratization of wealth management a practical reality. The next 12 months will see the delivery of persona-driven functionality for travelling relationship managers, first focusing on giving them the right information at their fingertips, then giving them the ability to edit data on the go and use the tool for issuing transactions. This will bring with it fully-fledged advisory workplace functionality and, at a later stage, the extra functionality needed for discretionary portfolio management.

Avaloq Engage, our new standalone engagement platform, will also be launched in the first half of 2020. It gives our clients the ability to offer both clients and employees superb interfaces and user experiences. Engage will integrate different communication channels, including instant messaging and co-browsing, to improve the interaction between advisory clients and financial institutions, blending banking and wealth management seamlessly and unobtrusively into clients’ everyday lives.

Both Wealth and Engage, as well as Avaloq Core, will be augmented in the next six months with new services based on our new data and analytics platform, Avaloq Insights. This supports better, data-driven decision-making, understanding and segmentation of clients as well as anticipating client queries by linking Avaloq Core’s enterprise-wide object model with data from the other platforms and with external data.

The two-year perspective

In the next 24 months, our clear priority is the continued development of all our platforms. For Avaloq Wealth, this means introducing customized reporting capabilities for each client, deeper integration of marketing and campaign management capabilities and a standalone onboarding solution.

For Avaloq Engage, we will be integrating the use of natural language processing and AI to improve interactions between relationship managers and their clients and incorporating client behaviour data to help our advisers provide more relevant investment proposals for each individual’s situation.

From a service perspective, the roadmap is clear about what we should do next. We will continue to increase the efficiency of the back-office services offered to our clients, aiming at our vision of an (almost) human-free back office. We will follow the path already taken with our recent acquisition of Derivative Partners, adding new higher-value offerings to our service portfolio. Alongside our leading back-office service offering, we will introduce new services for selected mid- and front-office activities. We will also be leveraging our extensive experience in design thinking – a radical culture shift within Avaloq that has brought major benefits over the last two or three years – to help our clients by offering them design thinking workshops covering a wide range of key topics.

Our planned activities strongly support our vision of the democratization of wealth management and our determination to help our clients delight both their staff and clients with a leading user experience, while steadily improving overall efficiency in the front- and back-office environments.

At the same time, we will not forget our heritage. We will ensure that all our solutions honour Avaloq’s traditional values: rock-solid information security, unfailingly dependable compliance, unmatched data consistency, scalability, front-to-back integration, open access to innovative and complementary fintech solutions and, of course, unsurpassed levels of efficiency.