By Gary Shepherd
Before we get into the technical elements of data hubs and who can benefit from using one, a good place to start is to address what they are (in the example within this article, everything is related to the wealth management industry).
Simply put, a data hub seamlessly connects financial institutions/multiple systems in a simpler way for the flow of complex investment data.
The wealth management fintech landscape
If we think about the wealth management fintech landscape, it’s fair to say there’s a huge array of tech options in the market. In fact, we calculated approximately 150 pieces of fintech in the UK covering back-office software, cashflow, risk profiling, suitability, product research, client portals, client reporting, AI and CGT software. If you then factor in 24+ investment platforms data into the mix and want to use that data in any of those software systems, approximately 3,000+ point-to-point connections need to be set up and built. Once the connections have been established, it’s then a case of keeping on top of all of them and ensuring they don’t change or break in the back end.
It is refreshing to see so many platform creating great API’s, but it’s a case of who builds to who, and then do all of the API end-points align (i.e. does a valuations field in system A, mean the same thing in system b?). In some cases, the data hub can homogenise/normalise the data, meaning you don’t have to worry about making the disparate data make sense.
Benefits of a data hub
Plugging into the right data hub can make the data you need so much easier to use. Not only to benefit your business but also the end client (I’m thinking about accurate client reporting and the quality of the data held in a back-office system and/or a client portal).
Now, this might seem like data hubs are aimed at large wealth management companies, but the reality is that anyone from a small advisory business, software provider, right through to an investment platform can tap into and benefit from a data hub. Simply put, the right data hub should offer the following benefits:
- Single connectivity – simplify the integrations between investment platforms, software systems and advisory firms for the flow of investment data. Connect to one hub and not via the multiple point-to-point route
- Data transformation – utilise accurate data that’s fully reconciled and normalised
- Flexible data delivery – tailored data formats delivered that work for you
- Support – just one port of call for all platform data queries
The bottom line
Whether you’re an advisory firm looking to enhance client service, a software provider aiming to simplify integrations, or an investment platform striving for operational excellence, a data hub can be transformative.
We’re now in a truly data-driven world, the question isn’t whether you can afford to implement a data hub – it’s whether you can afford not to.
Data hubs are an indispensable tool for wealth management companies. They streamline data integration, enhance data quality, improve operational efficiency, and offer scalability. By adopting a data hub, wealth management firms can position themselves for long-term success in an increasingly data-driven world.
If a data hub is right for you, check out our FINIO data hub for advisory firms, software providers and investment platforms for more information.
