New Trends in Wealth Management Core Banking Systems


 New Trends in Wealth Management Core Banking SystemsWealth management firms rely on their core banking systems to serve their customers across the entire value chain. But antiquated systems are challenging many financial institutions (FIs) in their quest to keep up with their industry’s ever-changing demands, which prioritize speed and flexibility.

While FIs of different sizes have varying challenges, at a bare minimum, all wealth management firms should be powered by a solid, data-backed foundation that feeds into a customer-friendly digital platform. These platforms are designed to help firms’ human advisors offer the most value possible, not replace their expertise.

Certain functions are table stakes for a core banking system: accounts and deposits, credit and lending, customer management, payments, and a system of records. But these basics aren’t enough to keep up with the evolving needs of clients. Modern systems are offering FIs increased customization options; they are often built on a microservices-based architecture and a cloud-native solution.

Key Considerations for Core Platform Vendors

Many wealth managers these days use their core banking vendor as their primary technology partner for best-of-breed middle-and-front office wealth-tech modules in addition to back-office capabilities. New platforms, implementation offerings, and capabilities are helping FIs upgrade their systems more easily than in years past.

Vendors in this market are increasingly decoupling their wealth platforms from their core software options and offering them as stand-alone products. This enables FIs to use these solutions as needed and to integrate them with other core systems they may be using. Decoupling wealth solutions from their core system offerings also allows vendors to stay competitive and provide faster implementations.

Modern core banking system vendors also have a wide variety of deployment options: on-premises, hosted, and cloud. Wealth management firms still largely prefer on-premises deployment, but cloud deployment has been gaining momentum in recent years.

In addition to decoupling systems and increasing their deployment offerings, core private banking vendors should keep the following in mind:

  • Any core system must support their clients’ expanding models to include capabilities such as a spectrum of environmental, social, and governance (ESG) capabilities; private market investments; and digital assets.
  • Wealth managers are navigating the world of regulations at the local and global level alike.
  • Scalability and flexibility of offering are paramount. While certain core banking vendors are leading the way, others have to adapt quickly to wealth managers’ need to serve new and varied client segments at speed as new demands are being placed by shareholders, regulators, and private clients.
  • The front-end digital wealth functionalities offered by core banking vendors play significantly into wealth managers’ choice of technology firm, thus evolving these functionalities is essential.

Evolving Options for Wealth Managers

Core banking vendors working with private banks and wealth managers in Europe and Asia are facing another challenge. Technology solutions owned by banks, such as Azqore (subsidiary of Indosuez Wealth Management) and G2 (Lombard Odier’s banking platform), are being white-labeled for FIs in addition to business process outsourcing (BPO) services. The upside of these offerings for wealth managers is that these solutions are, in a sense, built for them by other wealth managers.

One key area where core banking vendors can show their value is through their partner ecosystems. Collaborating strategically with other vendors can boost the capabilities available to clients while helping them keep costs low. Marketplaces with a broad range of vendor partners can help FIs leverage modern capabilities while ensuring vendors have a broader reach.

Another way wealth managers are keeping up with modern client expectations is through the use of APIs. Better integrated tech stacks that rely on APIs can help firms stay innovative while customizing the customer experience. APIs also make it easier for FIs to partner with third-party partners such as fintech firms to monetize their data.

For more information about this sector, key trends, and how core banking vendors in this space are evolving their offerings, read Aite-Novarica Group’s recent report Aite Matrix: Wealth-Management-Focused Core Banking Systems in Europe and Asia or contacting me directly at [email protected].