Creating the Solos of the Future?

The creation of innovation labs and digital garages by major brands and enterprises has become commonplace over the last few years and is a trend which shows no sign of abating. The mandate behind them is clear and largely universal, even if specifics around success measures and targets are harder to come by.

To work with small groups of smart people to develop products and ideas which large organisations would not be able to deliver within their existing structure.

Personally, I’m all for these facilities and I know for a fact that many are spawning great ideas (hopefully enough to keep their sponsors happy). Innovation functions which operate efficiently are picking up where research and development functions and propositional designers have failed over the last decade.

The silos of the future

These functions can be a brilliant way of introducing a pipeline of new ideas into a business but there is a problem which is all too often overlooked in favour of the next shiny thing. Without having an overall architectural vision and working hard to make new developments a part of the overall business and technology infrastructure, innovation functions run the risk of creating the silos of the future.

We often look at legacy business and technologies with a smirk as we see stove-piped pieces of product-led technology and operational support which seemingly have no view of shared capabilities and functionality. These often represent the hangover of a series of M&A activities spanning the past few decades. While many of these business lines can be profitable, this is often thanks to the very high margin business they run. The cost of supporting these legacy systems is typically very high and requires specific expertise that’s hard to come by. They also represent a large technical debt which increases the complexity of future change.

Unfortunately, without an appropriate level of planning, each new proposition runs the risk of standing alone within your company’s ecosystem. This is likely to counter any positive revenue impact from the propositional development and lead to a large mediation programme to “tidy things up” in the future. Today’s innovation becomes tomorrow’s legacy all too quickly.

Just enough architecture

In terms of mitigating against this, architecture (both business and technical) is a key consideration but it is important to be pragmatic when delivering this. The agile concept of “just enough architecture” is an important one here. It will vary between businesses but success will come from finding the optimal amount of information to gather to ensure change is done well. Not so much that you have teams of people spewing out requirements documentation, but also enough that it is not merely an afterthought.

By including analysis of key business and architectural objectives you should be able to think through some high level scenarios which show interaction between key actors in your proposed solution. An application overview, with key coupling points can follow this and will allow for future flexibility around integration and expansion.

A good old fashioned business case?

In addition to assessing the “do-ability” of concepts being developed through the innovation function, it is important to make sure teams adequately reflect on whether they should bother developing them at all. Of course, this question isn’t new, and has been the main point of a good old fashioned business case for many years.

I’m not proposing you produce a three hundred page board document with the ins and outs of every growth scenario, but I do think that, even though you’re developing innovative ideas, you should challenge yourself with some key questions and make sure key stake holders agree. If you don’t know the answer to these, I’d suggest stopping and taking stock is a pretty good idea;

  • Who is this for?
  • How do we know they want it?
  • How much is it going to cost if we a) prototype this, b) develop and launch this?
  • How will we know if this is a success?
  • How does this fit into our existing enterprise landscape?

Conversely, for every innovation function which could do with adding a commercial focus, there are others which are incredibly astute and will look to bin projects if they can’t show a return within a year. While these functions are far better at removing dead wood than traditional change functions, there still needs to be some careful planning around how the solutions work within the organisation as a whole.

For innovation functions to truly deliver positive and tangible change into businesses, there needs to be a refocusing from the short-termism and bauble chasing which some have fallen victim too, and a reflection on the value of solid business planning and architecture.

If you get these things right, the cool things you create might just be of enduring value to the business as well.

This article was originally published on The C Suite

Profitability pains: Robo-advice market stalls plans over financial fears

Money Marketing asked me to comment on profitability in the robo-advice market in the UK. My view was as follows, with a link to the full article at the end of the post. Would love to know what you think.

Expert View – Altus Consulting innovation head Adam Jones

The UK began by looking to the US for its “robo inspiration”, but the market and regulation are so different that transplanting the same business model is not appropriate. Most offerings have ultimately manifested as online, directly sold discretionary fund managers aimed at higher net-worth clients who had a lot of PR noise but not a lot of traction.

The key gap, however, remains: that of mass-market advice which opened up in the wake of the RDR and offers a rich seam of potential. There are millions of people who have previously not invested outside pensions and employer share schemes, but who need to make more from their money than current interest rates.

Smaller robos have been unwilling to tackle this area as the inherently low margins and high cost of acquisition make profit elusive. In order to succeed, firms will need to be servicing hundreds of thousands of customers, with a focus on smaller, regular contributions, robust automation and straight-through processing. They will also need an incredibly strong brand presence and a very long list of potential customers to market to.

This takes the opportunity away from start-ups and existing advice businesses, and instead places it squarely with retail banks and non-financial services consumer brands. We are likely to see the smarter robo start-ups realise this and pivot to providing white-labelled or enterprise software solutions through brand partners.

The barrier, as always, is the regulation within which advice needs to be delivered, but once a major brand cracks this with a live offering in the market, the others will follow suit rapidly.


Originally published in Money Marketing


Platforms Vs Adviser Back Office systems: A fight to the death?

There has been a silent war rumbling for many years now. It started with the emergence of a new market competitor around the turn of the century; Investment platforms. These flashy new web based offerings promised to provide the perfect antidote to the heavily paper driven world of financial advisers. They were structured to take away the pain of having to maintain direct relationships with umpteen fund groups across the country and to offer a simple and compliant way of managing trading, custody, settlement, client money and the all-important remuneration calculations.

Credit where it’s due, platforms have made a pretty good job of sorting out the administrative mess at the back end of most advice businesses. We certainly live in a more scalable and robust world than we did ten years ago as a result. This said, platforms haven’t really done a great deal for customer management. Don’t get me wrong, having an electronic source of some of a customer’s wealth was a revelation for many when the first platforms launched to market. A daily valuation of a price which is derived daily, delivered live to a computer screen near you. Hallelujah!

The problem, however, was (and still is) that only some of the client’s wealth is represented on a platform and platforms on the whole haven’t done a great job at spreading their wings to clients’ broader finances.

Enter the other side of the aforementioned war; adviser back office systems. Positioning themselves as a cross between a domain specific CRM system and an ‘advice process’ workflow engine, these systems have always had customer records at their heart. The problem has typically been the ‘everything else’ that they should have like up to date investment valuation and product positions, ancillary product line data and market information. Of course the challenge here is that those investment valuations are based on assets held across many platforms (and also many non-platform entities).

And so, for the last decade or so, both sides of the debate have shared a relatively uncomfortable co-habitation. The problem is, this uneasy equilibrium is bound to break at some point. Both parties are desperate to avoid being relegated to a utility service which is solely price differentiated. To counteract this, both platforms and adviser back office systems will try and claim more of the value chain. For platforms, there is a logical extension into offering better services around the ‘IP’ of asset selection. Be it through select fund ranges, internal DFM portfolios or additional investment selection tools, there is potential for platforms to make themselves increasingly useful to the investment committees and fund pickers at networks and firms.

Platforms also have the ability to improve their end-client interaction. Many already offer client portals as an additional enhancement for their advisers, and with the introduction of open banking and PSD II next year, it would be very straightforward for platforms to start pulling in customer banking data and building wider and more holistic views of client’s financial lives.

Adviser back office systems are equally well placed to start enhancing their offerings by building on the client portals that many already offer to make them more user friendly, and more integrated with a client’s financial life. They have the added benefit of already having access to a range of assets held across multiple platforms, while platform providers by definition only have access to one.

The one great gap for adviser back office systems is functionality for trading, custody and settlement. Without this, adviser back office systems will never completely remove investment platforms from the value chain but addressing this would be no mean feat as the area is riddled with complexity, both from a technology and a regulatory point of view. If they managed it though, it would likely leave adviser back office systems as the true central tool for adviser firms.

Of course, the regulator waded in on this during the RDR by all but dictating that advice firms are likely to need to use more than one platform unless they are particularly adept at segmenting their client books. As many of the larger firms struggle to maintain accurate address details for their clients, I think that might be a challenge and could put adviser back office firms off the idea of removing the platforms from the value chain. This said, there is a reasonable argument that the platform itself is secondary to the charging model and investment ranges which apply to specific clients. If adviser back offices were able to carry out some reliable segmentation of clients and tailoring of product based on this, they could be offering useful and compliant services.

It feels to me that there will be a shift over the next few years for both platforms and adviser back office systems as they position themselves to take more of the value chain. Both have challenges ahead which are central to their current business models. For platforms it is becoming a resource which can see wider than the walled garden of assets it holds in custody and potentially expanding into deeper investment services. For adviser back office systems it is the implementation of trading, custody and settlement which is both compliant and robust. For the victor the spoils are a solid place at the heart of the advice firms they service. For the party that fails, at best a future as a utility provider servicing business at the lowest possible margin and at worst, complete obsolescence.


This article was originally published on –


Adam Jones Head of Innovation at Altus Consulting and is responsible for research, thought leadership and consulting engagements relating to FinTech and emergent technologies. Adam has a range of experience across a number of emergent technologies including artificial intelligence, blockchain and distributed ledger technologies, RegTech, InsureTech and robo-advice. Adam has spent his career working within FinTech and financial services more broadly with an equal balance across business and technology work.