New realm of possibilities: Wealth management marketplaces gain in importance

Marketplaces for asset managers and banks are already tried and tested in the USA. They are also worth considering for German financial service providers: Their open architecture, multi-product and multi-custodian bank approach as well as flexible distribution channels allow them to create digitalised solutions that set new standards in efficiency, transparency and customer orientation. investify TECH is now also offering these marketplaces in Germany. First examples include flagship projects for savings banks and Fonds Finanz.

The wealth management market is undergoing transformation. New technological solution are changing the way in which advisors, asset managers and customers are interacting with each other. At the heart of this development are smart marketplace solutions that are based on so-called Turnkey Asset Management Platforms (TAMPs) and that bring together all core services related to wealth management.

Unlimited amount of strategy providers

investify TECH offers marketplace platforms for a variety of customer groups. They are suitable not only for independent asset managers, but also for banks and savings banks or fund distribution channels. The most recent examples include the Sparkassen savings bank marketplace that investify TECH is establishing in collaboration with Dericon and the dwpbank, or the marketplace of Fonds Finanz, Germany’s largest broker pool. One common characteristic these platforms share is that they connect multiple strategy providers or asset managers which can be distributed centrally via a platform. Instead of considering only one opinion on a market environment, distributors are thus able to access the expertise of many strategy providers. Names such as LBBW, Berenberg, DJE, Allianz Global Investors (AGI) and others, for example, now provide savings banks with actively managed strategies that can be mapped centrally via the platform. At Fonds Finanz, individual strategies can even be provided by advisors (34f). The process of comparing and selecting asset managers is simple and transparent – similar to an online marketplace. The major advantage: If needed, end customers are now able to better diversify their risk in asset management by selecting multiple strategy providers. At the same time, the risk associated with distribution also decreases: If an asset manager exhibits poor performance, he/she can simply be exchanged within the platform. The returns risk is thus also diversified for the advisor acting as the wealth management broker.

To the VV marketplace for savings banks

What exactly is a TAMP?

A Turnkey Asset Management Platform is a ready-to-use solution for financial service providers wanting to offer their services in a manner that is efficient, digital and scalable. The term turnkey describes the easy and immediate provision of all functions from a single source – from share deposit management and product selection all the way to mapping of all regulatory obligations (“end-to-end”) – if necessary even under the license of the platform operator. The technology and regulatory provider investify TECH has noted an increased demand for such solutions, in particular in the context of marketplace approaches. These are based on an open architecture that enables maximum flexibility: Distribution channels are able to incorporate different strategies, products, custodian banks and partner via a platform. Furthermore, customers can decide whether they want to operate fully digitally (“self-service”) or with an advisor by their side. It is precisely this hybrid approach, combining digital convenience with personal expertise, that is considered forward-looking. In this context, the white-label approach, versatile configuration options as well as rapid and easy implementation are key factors. Here, innovative technology is able to circumvent the challenges associated with outdated legacy systems. If necessary, the platform can be connected to core banking or CRM systems by means of an API interface.

More about the platform

Diversity of custodian banks as a backbone

Users of such TAMP solutions can opt for one or more custodian banks that are used within one and the same marketplace. At investify TECH, users can currently choose between Baader Bank, V-Bank, FNZ Bank, FFB, dwpbank and DZ-Bank. Further custodian banks such as Comdirect or Upvest will follow. There are also plans to incorporate custodian banks based in Switzerland. At investify TECH one can clearly see how differently distribution channels use the many possibilities: Within the savings bank marketplace, for example, only the dwpbank is used. The marketplace solution provided by Fonds Finanz, on the other hand, uses multiple custodian banks —FNZ Bank and FFB— that already foster close business relations with Fonds Finanz today.

To the FondsFinanz marketplace

Integration of other products possible

TAMP and/or marketplace solutions are suitable not only in the field of wealth management, but also in the context of investment advisory services, execution-only offers (fund boutiques) and in the mediation of overnight and time deposits. One feature all options have in common is that customers have free choice and can easily select the product that matches their needs. This flexibility allows financial service providers to target different customer groups and to establish or expand modular business models.
In all cases, the advantages are obvious: a decreased operational load, less regulatory complexity, faster scaling options and a high degree of automation. The digitalisation of processes frequently also offers cost advantages, all while offering greater individualisation.
The triumphant sweep of TAMPs will likely continue in the years to come – driven by regulatory pressure and increasing customer demands (best-in-class preferences).