Adaptive Transformation in Digital Wealth: Unleashing the Power of a Dynamic IT Architecture
  • May
  • 2023

Adaptive Transformation in Digital Wealth: Unleashing the Power of a Dynamic IT Architecture

Building dynamic and reasonably priced IT architectures that can evolve with your digital wealth business.

Even though the wealth management landscape is known for its conservatism, the change is continuous, and imminent. The great wealth transfer pumps younger customers into the industry, and according to the recent report by Oliver Wyman, an overwhelming majority (70%) prefer digital wealth channels to manage their funds. In addition, the experience of early adopters in the industry suggests that digital wealth services increase accessibility of wealth management services and used responsibly, may act as a valuable tool to help your prospects understand and envision the impact of using your services.

After the transformational impact of the pandemic and the looming revolution driven by artificial intelligence, there are few voices that doubt the need to update business models with scalable and efficient digital wealth tools. However, legacy IT architecture remains an issue that keeps many executives from future-proofing their businesses. Indeed, the ever-accelerating digital wealth transformation requires an adaptable IT architecture capable of accommodating both anticipated and unforeseen changes. Therefore, in this blog post we discuss both our and our customers’ experiences of building dynamic and reasonably priced IT architectures that can evolve with your business.

Balancing Modularity, Flexibility, Implementation Difficulty and Cost Efficiency

There are several factors to consider for a financial institution embarking on a digital wealth journey. Striking a balance between flexibility, modularity and the ease of implementation is crucial for building an efficient IT architecture.

Flexibility represents how adaptable your business is to continuous change. As your business grows and develops, you might want to expand your digital wealth services to new domiciles or update it according to feedback from your clients. In our experience, lean API-first solutions work well in this regard. For example, the flexible API-first approach to our simulation engine enabled our customer Skandia to quickly respond to their clients’ request to include a pre-statutory pension planning period in the insurer’s pension journey. In addition, it enables Skandia to build out their new journeys with shorter time-to-market and minimal overhead costs regarding technological compatibility.

Modularity relates to flexibility and yet it is different. Some companies need a solution for the entire customer journey. However, others have a technology operating system that can provide 80% of what is needed to deliver a digital wealth experience, so rather than a completely new platform, your firm might just need a component or building block to insert into your tech stack to create a complete customer journey. Therefore, assessing your digital wealth requirements is a crucial step when it comes to affordability of the project and the eventual quality of your IT architecture. When we created OutRank®, we designed it to give clients a range of choices for how they could implement our solution within their existing digital wealth strategic plan and budget.

Considering modularity and flexibility when choosing technology supporting your business is paramount to arriving at a solution that fits your purpose best. Modular systems support incremental changes and upgrades, although they can be more challenging and costly to develop and maintain. Conversely, a monolithic approach may offer faster, more cost-effective implementation, but can quickly become outdated and inflexible. We discuss the details of this balance in more detail in our earlier blog post.

Where to Start When Building a Dynamic IT Architecture

When it comes to digital wealth management and the distribution of financial products, certain functional technology areas are indispensable. Therefore, when you begin mapping out your digital wealth roadmap, it is a good idea to start by identifying the domains of your business.

For example, one domain would relate to your customers and focus on customer information, preferences, and the advice or recommendations that they have received. The second domain would concern the product – encompassing the details about the financial products you offer or distribute. Mutual fund data could be categorized within this domain. The third could relate to the holdings – representing the products your customers have purchased or invested in.

After defining your domains, make sure to categorize your applications accordingly. Depending on your business size, you may have numerous applications in each domain or a single application covering multiple domains.

Next, strategize your architecture by considering your desired outcomes. For instance, if you need to consolidate multiple applications within a domain and facilitate data access across different applications, create an aggregating domain service. This approach simplifies the replacement or consolidation process of applications within the domain, as other applications interact with the domain service instead of directly integrating with individual applications.

Drive Growth in Digital Wealth Management by Prioritizing an Adaptable Architecture

An adaptable IT architecture is crucial for accommodating anticipated and unforeseen changes. Finding the right balance between flexibility, modularity, implementation ease, and cost efficiency is essential. Identifying domains, categorising applications, and strategizing the architecture helps create an efficient IT framework. Although there's no one-size-fits-all solution for designing an IT architecture that supports rapid business change, incorporating these principles can help create a flexible system that allows you to continually bring innovative digital wealth services to the market with minimal hassle. By prioritising an adaptable architecture, wealth management firms can meet customer expectations and drive growth in their industry more efficiently.

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