This publication has interviewed one of the senior figures at Charles River, the financial technology firm well known to the wealth management sector, about its strategy and thoughts on Asia in particular.

This publication recently caught up with Peter Sherriff, principal solutions architect for Charles River, which describes itself as a firm that “provides an end-to-end solution to automate front- and middle-office investment management functions across asset classes on a single platform”. The company’s services will be known to many readers; what they will want to learn, however, is the strategy of the business and its thoughts on trends in wealth management. In particular, this publication wanted to ask about developments in Asia.

Firstly, some biography about Sherriff. He joined Charles River’s London office in 2002 and was responsible for developing the customer service organisation for the EMEA region.  In 2004, he transferred to Melbourne to help establish the APAC arm of the business. Since then he has been responsible for working with both clients and prospective clients to design solutions that incorporate the Charles River IMS into their business and technical architectures.

In Asia, what does Charles River see as being the main types of requirement that wealth management firms have and how does this compare with what it sees in other regions, such as Europe, the Gulf and North America? Why do such differences, if they are evident, exist?

Asia is generally less homogenised than some of the other regions such as North America and Europe and as a result is often facing a larger volume of changes simultaneously. Recently this has been manifested as a high number of regulatory changes. In the more developed markets such as Singapore and Hong Kong, the relatively small market size and low returns on deposit instruments means there is more interest in foreign or dual currency based investments, often in the form of a structured currency product. We see and hear more about the need for digital channels in Asia due to the tech savvy nature of the end customer, who is often a younger entrepreneurial type and is driving requirements around enhanced information delivery mechanisms and communication channels.

The non-business related requirement is simply for better technology. There are a lot of legacy platforms in the established private banks which provide a very piecemeal working environment for relationship managers. There’s a lot of manual input and many tasks are labour-intensive, even such seemingly simple tasks as reviewing a client’s portfolio on a holistic basis across all asset types. The banks need more scalable, flexible and robust systems to cope with the changing regulatory environment, while improving their agility to bring new products to market more rapidly.

We hear that using technology to improve the efficiency of relationship managers - and freeing them up to find more clients - is a central theme at the moment. Are you seeing this? In what ways does your technology help firms to improve efficiencies? Please give some examples.

Absolutely! One of the biggest complaints we hear from relationship managers is what should be simple tasks are hindered by existing technology which has evolved piece by piece over time to solve an immediate need. There is a growing recognition from banks that providing relationship managers with a comprehensive, front-end solution that brings all client-related holdings data into a single view provides significant efficiency benefits, and also empowers relationship managers to have more meaningful conversations every time they interact with their clients.

The Charles River IMS provides banks with the tools their relationship managers need to not only bring this information together into an integrated dashboard, but also to interact with the client’s portfolios to see how decisions may impact different areas such as asset allocation or portfolio risk. By enabling this immediate feedback to clients regarding their investment decisions and then pushing these decisions through to implementation in real-time, the levels of efficiency within the front office are significantly improved, and often so are the relationships with the clients as a result. Significantly, we also see banks realising efficiency gains from having a single front-office platform across different business lines and products such as brokerage, SMA, UMA and discretionary portfolio management offerings.

When looking for a return on investment, what do wealth management clients typically expect from you in terms of timeframe and other metrics? How do you manage expectations around this?
Implementing the Charles River IMS is very much a strategic decision typically aligned to the bank’s goals over a multi-year horizon. While implementations are often phased to enable the realisation of benefits almost immediately, it’s critical to manage client expectations in terms of timelines. We work closely with a bank before they become a client to ensure the various stakeholders are on board and realistic in regards to the phased delivery and benefits of each phase. When working with multiple teams and systems, transparency is the key to managing expectations. Delivering real change is impossible without honest and open dialogue between all affected business areas. 

Our clients are all at different levels of maturity in terms of business model and technology architecture, so ROI [return on investment] and how it is measured varies from client to client. Often ROI can seem a little intangible at first – for example, what’s the ROI on reducing time to market for new products once the solution is bedded down?

Without naming clients' names, have there been any recent implementation projects you have done that have gone particularly well/presented certain difficulties from which you have learned important lessons?

We have had a number of very successful projects recently and the feedback received from the banks and relationship managers on those projects has been extremely positive. In fact, with a few of the large projects involving thousands of relationship managers, we’ve experienced different offices requesting to be brought forward in the implementation scheduling because they were so impressed with how the Charles River IMS helps with their daily tasks.

As you’d expect, every project has its challenges, and often these can be cultural because clients have been working a certain way for many years.  A lesson learnt from early projects is having the right buy-in from the business at the very beginning makes it easier for change to be not just accepted, but embraced.

When using technology, is there a mistake that you see wealth managers making that you think worth drawing attention to?
Time and again we see banks persist with deploying tactical solutions to meet an immediate business need, whether regulatory or product related, which over the medium to long term proves to be incredibly expensive.  A strategic IT project to overhaul platforms is often considered a lengthy and expensive activity with little obvious benefit and is consequently often viewed as a low priority. The experience of a number of our clients suggests in reality, a strategic overhaul of the front office platform delivers significant benefits to relationship managers and their clients, while reducing the overall IT maintenance costs once the project is complete.

There has been a fair degree of M&A in wealth management at the moment and this of course can raise tech challenges such as in merging different systems, or other forms of integration. 

Please elaborate on what you think are the issues here.

A number of banks involved in M&A activity are on their second or third acquisition now and have learned from previous experiences, leading to a more streamlined process. The migration and reconciliation of data from a legacy system is always going to have its challenges, but with the right front office platforms in place that seamlessly integrates data from multiple sources, the impact for relationship managers and clients can be minimised. Integration itself these days is largely a solvable challenge for most IT teams and technology providers because it’s something we are all experienced in from previous projects – it really comes down to cost and timeline pressures.

The Asian wealth management industry is still more "transactional" than in Europe, for example. So what sort of systems tend to be more in demand and can you give some examples?
Yes, the business in Asia is still currently more transactional, however there is a slow but steady shift of assets towards discretionary products and we expect this trend to continue over time. At the moment we’re seeing a demand for systems which can present relationship managers with a consolidated view of a client's portfolio. This is growing in importance as banks launch new products. We’re also seeing more interest in cross-asset electronic trading platforms. Historically each asset class has been traded by the bank on a separate system, but the ongoing cost to manage multiple systems, including staff training costs, is becoming more of an issue.

Are there products and services at Charles River that are coming on stream at the moment that you would like to discuss briefly?
Charles River is continually improving the solution set by enhancing the Charles River IMS and the value added services which form the total solution offered to our clients. We recently launched our investment book of record capability as an integrated component of the solution and we’re seeing strong demand for this within the banks as a way of streamlining information delivery to front office users. This is especially so for banks with multiple booking centre systems and multi-strategy products such as UMAs. We’ve also seen a lot of interest in our "Wealth Hub" product, which links the banks with the asset managers who provide models or services around discretionary portfolios.