Co-founder of global wealthtech firm InvestCloud shares how companies might be overlooking strategic and operational risks
When Yaela Shamberg recalls the early days in the development of her wealth technology platform firm, she remembers how companies were so focused on their performance and growth, and yet were so blind to a central risk to their business.
“When we started years ago, we understood that the industry, even then was plagued with a lot of what we call technological debt. Certainly, it still is now,” the Co-founder and Chief Product Officer at InvestCloud told Wealth Professional. “You have a lot of companies with a lot of legacy technology.”
That legacy technology included hardware and software systems that were 20 to 30 years old, as well as point systems installed at disparate locations across the enterprise that weren’t built to talk to one another. With no central repository for data, firms had to set up processes to transmit data from one location to another, “translate” data into formats that will be accepted by certain applications, and consolidate reports from across multiple silos.
A major problem for many firms, she says, is that their size and scale require them to keep their old technology operating at full capacity. Because they’re so busy maintaining their systems and their processes to keep the business running, they rarely have an opportunity to innovate and invest in new systems. That creates a vicious cycle that, if it persists for too long, can lead to a painful and fragmented user experience, both for clients and advisors.
“One client came to us, and we were getting ready to integrate some of our technology with their in-house systems,” Shamberg says. “We were about to do an SSO handoff, and we were asking for their client identifier to log in. We found out they had more than 20 client identifiers to log in to their systems; they didn’t have a central data hub with a master identifier.”
Even now, such problems could be festering within many enterprises in the North American wealth space. The initial impact of the COVID-19 pandemic in 2020 lit a fire under countless companies to accelerate their plans for digital adoption. Years-long timelines were compressed into months, and wealth technology firms saw heightened business as firms looked for digital solutions to maintain client service.
“It’s shocking to think that firms could have latent technology issues like that, and it often proves to be the case,” she says. “So that’s when we hunker down, get our best people on the line, and say ‘we’ll figure this out.’”
Shamberg says InvestCloud’s focus is to help transform the financial industry’s approach to digital. That means understanding wealth managers’ need to retain and grow their clients, which goes hand in hand with obtaining a level of operational efficiency.
Once they can deliver on all three of those promises, firms reach a state of digital enablement where advisors have the right toolset to communicate with their clients, manage their relationships, and incorporate a certain degree of automation that allows better service across their book of clients.
“From how it was designed, architected, and built, our platform is 100% cloud-native,” Shamberg says. “We can take in data from the many different systems our clients may have, bring it into our deep data model, and allow all the systems to talk to each other as well as any programs or apps they need from us. In the end, we help facilitate the creation of their entire ecosystem, because we can help translate and store data from anywhere.”