Business Automation using Microsoft Power Platforms
Binding seamless Technology with Finance
General Published on: Fri Feb 10 2023
Consolidation wave hit the Wealth Management Technology space in 2015. Even though mergers and acquisitions were rampant, new players and changing technology landscape widened the technology gaps due to incompatible technologies, resulting in fragmented IT infrastructure.
To plug the gaps, firms felt the need for better integration between different software acquired by a firm. This, we feel, compounded the problem even further.
The systems already in place in large banks were outdated legacy systems, which didn’t sync well with the modern front-office solutions, where the customers can now access information through multiple channels. This, along with the fragmented technology in general, posed a huge problem to the financial institutions looking to collate all the moving data pieces in one place and present an accurate, comprehensive, and up to date view efficiently.
Why is ‘integration’ not the long term solution?
The integrations or the adapters fixed the immediate need for data flow across the systems. In a broader sense, having an integration pipeline based on multiple such connectors added to the chaos.
The Core Problem
At Hexaview believe that the core problem lies in how the custodians store and share client data with portfolio managers or financial advisors. Every custodian has a different format for representing data, and there is no-followed standard. The same data is stored in different tools like the Portfolio Management System, Financial Planning Software, Trading Software, etc. Every software in the Wealth Management life cycle must interact with the custodians at one point or the other. This software boasts of having connectors to hundreds of custodians.
And this is why integration fails…
FinTech companies need to understand the importance of open architecture & embrace data representation standardization across these product lines. The way XML changed the game by enabling heterogeneous software systems to interact, a standard way of representing transactions, positions, accounts in a technology-independent manner, would dramatically change the scene of wealth management integration services.
Therefore, we need to find alternative solutions to the problem. Instead of finding ways to work around the issue, we need a long-term strategy to fix the issue while not forgetting that many new players are entering the FinTech world every day.
How to achieve “THE SOLUTION”
After studying the various stakeholders and systems in use today, the basic architecture should have two most important pieces:
Core central EAI (Enterprise Application Integration System) & GDW (Global Data Warehouse).
These should serve as the only sources of TRUTH for all applications used by front end systems to back end systems. All data would originate from here and would terminate here. The GDW becomes our Data house, and all the applications pull the data as and when required from the GDW and save the data back into the GDW, which gets stored therein a standard format. This way, the interaction between various tools or systems would be through the GDW, which ultimately would make it possible to bring all data in one place & a common format.
Here is a diagram to explain better:
All data would originate from here and would terminate here.
There would be multiple benefits to such an arrangement:
However, every big shift of technology leads to some spill-over effect. In the absence of any standard in representing information, having a single source of data could be tough and might involve high costs. It would be similar to developing a platform and integrating it with the vendor’s Off-the-shelf products. It certainly would be wiser to shortlist a vendor based on their offering’s open architecture and its ability to get easily integrated to the firm’s GDW. Hence, instead of being a special feature, compatibility with the GDW in a system would become a pre-requisite.
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