What should companies look for when selecting a WealthTech provider?

What should companies look for when selecting a WealthTech provider?

WealthTech is a highly competitive market that continues to welcome more startups each year. In fact, a recent report from 360 Research Reports claimed that the market size will rise at a 22.69% CAGR, going from $8.1bn in 2021 to $27.8bn by 2027. While a huge market  empowers companies to choose between providers, it can be overwhelming when trying to find the best provider for the job.

FinTech Global recently released a Market Map that aims to give financial professionals a guide through the market and identify the leading tech providers. However, this tool cannot give a company all the answers for which vendor they work with. There is no right answer to who a company should pick and there is no simple way to identify the right fit. However, there are several key capabilities that companies can look out for that can help them with their decision.

Antonis Metaxas – Strategic Advisor at investing technology platform Velexa – highlighted a few of the factors to account for when choosing a vendor. Some of these include customisation and scalability, integration capabilities, customer support and training, cost and pricing, industry reputation and much more.

Radomir Mastalerz – the co-founder and CEO of award-winning, easy-to-use, and affordable wealth management platform WealthArc, believes that firms first need to understand their needs. “What are you looking for? What type of automations will bring the most value?” These are the questions they should first ask themselves. They should also look to define the minimal functional, such as system functionalities, and non-functional, including location of data hosting, criteria for selecting a provider.

He added, “Secondly, build upon your current systems. Even the best WealthTech solution will not bring value if not properly integrated with existing systems and workflows. Think of your processes and data flows. How should the new system fit and which systems it needs to be integrated with?”

Following this, they should calculate the total cost of ownership (TCO) over a designed period, which is typically five years, he said. The TCO includes the cost of software, infrastructure, integration, maintenance, onboarding and more. “Always compare the TCO with potential gains of implementing a chosen solution.”

However, one vendor might not hold all the answers. Rather than trying to find a miracle solution that can do everything, firms might be better off picking multiple solutions that can complement each other.

Karen Oakland, VP of industry marketing for financial services at customer experience pioneer Smart Communications, said, “Just like in every industry, wealth management firms need to consider the trade-offs of choosing single platforms for multiple capabilities versus putting together a combination of best-of-breed technologies. While it may seem easier to work with a single vendor, that company’s solutions may not be the best across every function.

“With today’s cloud-based infrastructures and flexible APIs, it is easier than ever to choose the best enterprise solutions and connect them relatively easily. A side benefit of this approach is the ability to turn different systems on and off as needed, instead of having to replace an entire system.”

Key capabilities to look for in a vendor

Whether a company is looking for a single vendor or multiple, there are a few capabilities they should have. One of these is prebuilt integrations with leading core systems, such as CRM, e-signature, document archiving, or other core tools, Oakland said. On top of this, assess the vendor’s partner network, including technology firms and consulting partnerships. As many companies have adopted a Marketplace approach that allows customers to quickly find aligned solutions, these connectors are important for the future growth of a platform.

Connectors are not the only feature to be on the lookout for, interoperability with other systems is crucial. This is one of the benefits of modern cloud-based platforms and allows for two providers to interact with one another to exchange data. While a company might initially be looking for a single vendor to fix a problem, this doesn’t mean they can ignore interoperability as later down the line they might need that solution to link up with another. Oakland said, “There is no one size fits all platform, and today’s enterprise should be looking at ways to build a best-of-breed tech stack. Even if you prefer to work with a single vendor for your project, it’s important to think about a future-proof system that will support future technologies you can’t even anticipate yet.”

One of the key points that was noted by both Oakland and Metaxas was the need for scalability. Technology is advancing rapidly and while a solution might be state of the art today, it could easily become outdated within a couple of years. Legacy systems have hindered the adoption of technology for many financial institutions firms and failing to implement a scalable solution risks the same challenge occurring. Even if the technology stays relevant, if a company manages to grow substantially, a solution may no longer work for their size. To protect themselves from this, they need to look for a scalable solution.

Metaxas said, “Choose a technology partner that can support your future growth, covering both depth of the functional capabilities and array of front-end and back-end solutions.” Likewise, Oakland added, “Run speed tests and look for proof that the technology will not slow down or worse, fail, when hit with higher volumes.”

Other important features

If a company opts to go for a cloud-based solution, Oakland urged them to investigate their cloud maturity. The term cloud-based is not enough to ensure the solution can optimise cloud workflows. Companies need to examine whether the vendor has worked with clouds hosted by major players, such as AWS and Azure, as well as hybrid cloud infrastructure needs. Also, ask them questions about how many customers they have running cloud solutions, who is responsible for managing the deployment and whether it is a private cloud.

As an example, Smart Communications has nearly ten years of enterprise cloud experience. This includes a sophisticated SaaS Ops practice and hundreds of clients running production cycles within the cloud, with some of these producing millions of documents and digital communications. Looking for capabilities like this will ensure the company has a vendor that can offer the full potential of the cloud.

Other features Oakland highlighted were the implementation speeds and overall time to market, the frequency of updates to ensure the product stays at the head of innovation, and software models that allow system admins to specify the functions a business user can perform based on their function or role, as well as full auditing capabilities.

It’s clear that choosing a vendor is not a simple process and many factors need to be considered. Here are just a few other points companies should consider when heading into meetings. Customer success stories offer great insights into working implementations, similarly a case study from a rival could offer insight on what to expect from an implementation. Companies should also look for vendors that make customer success a priority and have a reputation of excellent support. Finally, an ideal vendor is one that works as a partner and will support the client throughout the implementation. There are many vendors that will implement the solution and then disappear.

Metaxas said, “It’s important that the partner you choose offers a dedicated customer service and a human touch. You want to be looking for a growth partner for at least 5-7 years, not just a short-term solution.”

On-prem or the cloud?

As mentioned, a company might not want to work with a single vendor, but a group of connecting services. This means they will need to have infrastructure that allows multiple vendors to be implemented without masses of coding, but also ensure the systems can work together, if needed, rather than operating within silos. This raises the question: should a firm implement services on-premises or through the cloud?

Mastalerz said, “The majority of the new-age WealthTech providers are moving to the cloud, and there are good reasons for this. Cloud provides high availability, scalability, and low maintenance costs. Software updates can be applied instantly, and data can be hosted in one of the many regions to comply with the local regulations. However, if you already have existing on-premises infrastructure, it might make sense to utilise it for new software.”

Oakland confirms, “Most Smart Communications clients are moving their systems of client engagement to the cloud.”  The rapid growth of the space gives some credence to this belief. According to Precedence Research, the cloud computing market is expected to reach $1trn by 2028. Moreover, 94% of enterprises are using cloud services, a RightScale report claims.

To explain this future, Oakland offered some of the key reasons but indicated there were many more. Speed is a major boon of cloud-based solutions. On-premises and legacy systems hosted and managed in the cloud have long and expensive upgrade processes, whereas cloud providers can be incredibly agile.  In fact, these systems can offer multiple products releases a year with near instant availability to customers. Not only does this provide a consistent string of new features, but it also allows them to get quick patches to any issues with the solution. On the reverse, an on-premises system could be years behind the latest product version or even the competition, Oakland said.

As technology continues to advance swiftly, speed and agility of a system could be vital for success. “Say your financial services institution needed to automatically turn on access for hundreds of new advisors to manage an influx of customer requests. With instant-on provisioning —made possible through cloud technology — you can make this happen within minutes instead of lengthy implementations and/or upgrades that would be required with legacy on-premises software platforms.”

Interoperability was one of the key features Oakland urged companies to look for when picking a vendor, and it is a reason to go for a cloud-based solution. She stated that legacy or cloud-enabled platforms built for on-premises deployment typically rely on outdated technology standards, have limited APIs and lack the ability to integrate with existing internal infrastructure. This is particularly pertinent if extensive customizations have been made. Instead, having a published API set, which cloud-based solutions boast, allows for greater integrations and interoperability.  “This is critical today when most companies are managing multiple technologies related to the customer experience. Integrating these systems reduces silos, increases internal efficiency and creates a more consistent and rewarding experience for customers.”

Warning signs

It can be hard to identify the warning signs when coming out of a pitch. Sales teams do a spectacular job of making a solution look like it is perfect, but companies should try to spot any warning signs. Some of the warning signs that Metaxas urges companies to look for are limited customisation, lack of scalability, poor customer support, outdated technology, lack of training and documentation, and negative reviews and feedback.

Oakland also offered some red flags. One of these is a technology provider that does not have many customers successfully deployed in a SaaS model. The reason for this is that a short market experience means vendors are typically hesitant to implement reliability metrics within contracts.

Other warning signs are limited customer support hours in your region, little internal investment into product innovation and a huge burden on IT resources to manage a solution.

WealthTech is not the only space where companies are spoilt for choice. Customer experience has become a major battlefield and companies are looking at how they can ensure they provide the best services. This has led to a booming market. To help companies navigate the space, Smart Communications has released a guide, which can be found here.

Keep up with all the latest FinTech news here.

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