Know Your Digital Platform – 5 Critical Questions to Ask

The Silos Are Falling

Financial services runs on data, lots of it. Hosting applications and outsourcing computing power in the cloud are quickly becoming the norm but are creating a much larger ecosystem of data sources beyond the traditional reach of IT.  Application and system design today must incorporate a framework to reach outside of an organization’s four walls in order to remain competitive.  The world where an application is locked into performing functions on its own captive data source is dying.  Traditional software applications that lack the reach and range of cloud-enabled services are quickly becoming obsolete.

This new development approach allows businesses to cast a much wider net around cloud based capabilities and external datasets. With broader footprint and integration boundaries come important new design opportunities as well as significant challenges.  As institutions now have more variety of products and services, client segments, and localization concerns, they have to make the most of their data, vendors, and technical capabilities to remain competitive.  Digital solutions offer a powerful competitive advantage, but to do that they must be specifically designed for the cloud from day 1. The digital institutions that do this best will quickly displace the legacy financial firms that are still using hard-coded, slow moving enterprise systems.

Cloud opportunities create significant development and delivery challenges for vendors as well. Technology buyers have a much larger due diligence process around security, stability, and domain experience when extending business strategy outside of the local IT dept. In this week’s NewThink, we discuss the modern focus on capturing data and developing business strategy around application extensibility, design, and why buyers should be asking new types of questions in the RFP process.

1: Product or Digital Platform?

The first new question is whether the vendor is offering a “digital platform” or a “product”.  In consumer terms, an individual blog tool would be considered a product.  Alternatively, Facebook is considered a digital platform that empowers both sides of the marketplace, consumers and businesses, to develop unique tools specific to their individual needs.  This is a foundational starting point to addressing the cloud software paradigm.  The best short description of this was recently shared by Wolfram Jost, CTO of Software AG, “The Digital Business Platform provides the foundation necessary to develop and deploy differentiating business applications, developed together with the business departments, in short and easily foreseeable release cycles. Traditional packaged applications are not designed for this type of development approach.1”  Jost is addressing the limitations of traditional software products and the legacy design approach around predefined, hard-coded business logic. Digital Platforms are significantly different by architecturally separating application logic from presentation screens and data management.  Essentially decoupling the data, business logic/calculations, and the presentation of these applications into segregated technology tiers creates design freedom and levels of integration not previously possible.  This modular approach ensures systems and applications are designed with change in mind.  It is much easier to add new data sources (A new product or service supplier for example) to an individual layer of a technology ecosystem than re-writing an entire application. Digital platforms, unlike software products, can quickly migrate and pivot based on business strategy without the pain or cost of traditional software upgrades.  Digital Platform vendors, specifically industry focused vendors like InvestCloud, “Future-Proof” firms when adding new digital capabilities.  We call this “Sustainable Customization”

2: Monolith or Apps?

The second new question for evaluating your technology vendor is whether their offering is a single enterprise application or whether it is offered in discrete functional packages (Apps) that can be configured to your specific business requirements. This “App” approach to development and implementation is important for two primary reasons. First, an app approach quickly identifies the vendor as a digital platform. If a vendor claims to be a digital platform but cannot segregate the functional layers of their offering for unique client configuration, then your platform may quickly become a large product with no extensible life. The second value of an App approach like the one used by InvestCloud is the ability to license just the functionality specific to client requirements.  Assembling “Lego” blocks to tightly connect needs and capabilities will accelerate time-to-market and reduce costs by limiting complexity of a project. Breaking down a large problem into smaller individual problems has proven to be a successful approach to engaging app based platform vendors.

3: Programmers or Toolsets?

The third, and we believe most differentiating question, is whether the vendor’s development approach still depends on traditional programming to create its applications.  InvestCloud leverages a proprietary toolset allowing business analysts and designers to collaborate on application configuration. This approach allows industry SMEs and design teams to do the work of traditional programmers dramatically faster with more accuracy.  By moving the design process closer to the business needs, and allowing for rapid proto-typing, this PWP (Programs-Writing-Programs) approach not only reduces the chance of scope creep, but also collapses development costs and delivery time. Another result of PWP is that clients are open to innovate and create Apps that address a much wider range of business process requirements that are specific business needs. Evidence for this is InvestCloud’s catalog of Apps and screen view customizations that now have thousands of permutations with functionality specific to digital client communication, management, and automation capabilities.  660+ institutional firms and independent advisory clients have individually designed Apps specific to client portal, advisor portals, client communication, client reporting, and financial mobility.

4: Cache or Call?

The next critical question to understand about your technology vendor is whether they are built for big data. Broadly integrated digital platforms must take on the normalization and management of many datasets of all sizes, both structured and unstructured.  Buyers need to know that the vendor has built a continuously improving, robust data warehousing structure designed for the digital age of FinTech.  Inexpensive (cheap) database technologies and independently configured databases get slower and harder to maintain over time as the data and client demands grow.  By contrast, InvestCloud’s digital warehouse was designed specifically for data of all types and sizes from tax-lots to alternative investments, social media feeds to  unstructured client statements. We call this the “Blueprint” to financial services…a data warehouse designed for all types of financial service firms and digital capabilities. Data and integration vendors in financial services must have a deep understanding of complex data models, digital data warehousing, and fast, scalable systems to accommodate for the complexities of many types of clients, products, services, and even unforeseen business opportunities resulting in new data requirements. InvestCloud’s patented Digital Warehouse allows financial institutions of any size to access these capabilities in both cloud and on-premise deployments.

5: Aligned or Potential Competitor?

A last addition to the new vendor scorecard is less about technology and more marketplace strategy.  When platforms architecturally separate presentation “form”, from application “function”, from data “fulfillment”, as is required for success in the new cloud paradigm, suppliers have the opportunity to collaborate with partners that may now represent themselves in the same application interfaces. This go-to-market partnership approach is part of why BlackRock acquired FutureAdvisor, Invesco acquired Jemstep, and most recently, Eaton Vance’s commitment to a $33M lead investment in SigFig.2 It also speaks to the logic of Envestnet’s acquisition of Yodlee. The practical business implication, and risk, of these marketplace collaborations is that buyers need to understand how a technology vendor may become a potential competitor.  InvestCloud’s digital platform offering is free from these potential conflicts and has been a B2B solution since day one.  We only provide hyper modular apps like client portals, advisor portals, client reporting, client communication, and financial mobility.  We do not manage money or offer consumer financial services such as lending or asset allocations. We believe our commitment to investment products and financial service neutrality is important and is partially the reason why some of our key client partnerships are among the world’s largest financial service organizations.

Who Says So – The Importance of Validation

Finally, it is very important with digital service providers to acquire external validation concerning their digital platform operations and governance.  Much like GAAP standards for accounting that can be certified by auditors, parallel audit standards for technology service organizations are also crucial for vendor selection. These audits (SOC/SSAE 16) provide assurance to buyers that a service organization’s controls that directly affect security, availability, processing, maintenance, and integrity of the systems have been reviewed by 3rd party professionals.  Acquiring these certifications is a rigorous process with audit review at all levels of the organization and technical focus. Buyers should expect financial service focused vendors to have completed these certifications directly and not simply sharing the audit reports of the data center hosting the applications.  Successfully completing, with zero exceptions, the SOC 1 Type 2 (SSAE 16) and SOC 2 Type 1 audits, InvestCloud understands the rigor these attestations require. Given the private and business critical nature of client data, these certifications should be a non negotiable requirement.

About InvestCloud Inc.

Headquartered in Los Angeles, InvestCloud empowers investors and managers with a single version of the integrated truth through its unique digital platform. Today the InvestCloud platform supports over $1.6 trillion of assets across some 660 institutional customers. InvestCloud creates custom solutions for better decision-making. From Client Communications (Client Portals and Client Reporting) and Client Management (Advisor Portals) to Digital Warehousing and Data Analytics, InvestCloud offers first-class investment platforms for successful investing that are rapid to deploy and hyper- modular. Customer segments include wealth managers, institutional investors, asset managers, family offices, asset services companies and financial platforms.

For more information, visit

1: Bridgewater, Adrian. “What’s the Difference Between a Software Product and a Platform.” Forbes. 17 May 2015

2: Din, Suleman. “SigFig’s $40M Infusion Unites Big Names Across Wealth Management.” Financial Planning. 24 May 2016

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