16. Jun. 2022Barry Frame

Business model transformation in asset management

How to efficiently expand digital investment advice to new client segments

Traditionally, large asset managers offer their products through a B2B partner network. The industry is now moving towards serving investors directly, without intermediaries, through digital channels. This shift is not happening only in the asset management community – traditional banks are also embracing a direct model, which allows for lower-cost advice that can be offered to a broad investor base, including retail and affluent client segments. In other words, by transforming their business model, a new and larger client base can be served efficiently, thus democratizing access to wealth management.

At Avaloq, we have recently supported an asset manager who understands this market opportunity and is leveraging our core platform to efficiently enter new markets and serve clients directly.
 

Case in point: Launching a low-cost digital-first investment advice solution across Europe

An asset manager has recently embarked on a journey to cut out intermediaries in the value chain and establish a low-cost digital investment advice offering directed at individual investors.

The asset manager drafted an approach to roll out their offering across multiple European markets based on the following cornerstones:

  • Offer a digital-first approach for investors with support via call centre/concierge service
  • Onboard and service investors without the need to have a physical presence in the market
  • Provide cross-border services to European clients from one centre leveraging European passporting rules
  • Launch business units in new markets in a short timeframe and integrate them on the same technical platform
  • Optimize IT and back-office operations to lower the cost of advice
     

Leveraging a strong partnership network for effective go-to-market

Along with the asset manager, a leading global consulting firm drove the complete go-to-market process from start to finish by choosing the right business entity structure, acquiring the required licences, getting the appropriate regulatory approvals, contracting with local partners such as street-side services, tax reporting arms, brokerage chain, fund administrator or data feed providers, and selecting Avaloq as the technology partner.

Through design thinking-led workshops, Avaloq helped shape the solution that would allow for high levels of automation and straight-through processing, and hence help the asset manager efficiently scale their business and focus on providing superior client service at low cost. From inception to implementation, the process took under nine months.
 

Efficient and fast market expansion underpinned by Avaloq’s middle- and back-office infrastructure and processes

The key drivers in choosing Avaloq’s solution were its scalability, capability to run IT and back-office operations, as well as easy API connectivity with other systems such as the asset manager’s own front-office system and third-party solutions.

Avaloq’s proven multi-entity single-instance model available in the core platform supports the asset manager’s international growth ambitions and covers regulatory and tax obligations across different markets out of the box. Just one software implementation can support multiple entities and booking centres, with the possibility to run shared back-office services for several countries from one service centre, where the market permits.  

For operations, economies of scale across markets are achieved thanks to defined common processes and structures throughout the system. Avaloq’s solution is now live in the first market and operated in a Software as a Service (SaaS) model by Avaloq out of our private cloud. On top, Avaloq has taken over the back-office processing by implementing our highly automated and efficient Business Process as a Service (BPaaS) model. 

The combination of existing technology and services sets a foundation for a fast expansion into new markets and will significantly reduce costs compared to choosing a new vendor in each market.  

 

Written by Barry Frame
Barry Frame joined Avaloq in 2018 and was appointed to the Avaloq Group Executive Board as Chief Customer Success & Sales Officer in 2021. Barry brings more than 17 years of experience covering financial institutions and asset managers across EMEA, including regulated services provision and material outsourcing arrangements.