Platform market faces zero-margin shake-up
Leading platform providers are being urged to rethink their business plans, models and technology, as they prepare to take on new rivals.
Bravura Solutions director of product management and strategy, Darren Stevens, warned that system modernisation "is a critical prerequisite for future business success", as global trends push towards ‘zero-margin'offerings.
"Historically, the Australian platform market has been considered difficult to enter, because it has been so tightly held by just a few major players," he said.
"Unlike the US and UK markets, it's been a relatively small and isolated space that has not had to deal with competition from neighbouring countries within our region. While a few newcomers have arisen with more modern and holistic solutions, they have made relatively small inroads into sections of the market.
"In the next five years, however, there is every indication that this situation will change.
"In global markets, we are seeing the emergence of the concept of zero margins.
"Extremely cheap products, simply delivered but very heavily marketed, could have a chance of disrupting the Australian wealth management market in the years ahead.
"A memorable example in the banking segment was when ING Direct entered the Australian market and turned the savings market on its head with its low cost online offering, because that's what consumers wanted.
"Against this backdrop, there is a very real risk that a Fintech or large global player will employ zero margins to wreak havoc on the Australian platform market."
Stevens urged platform providers to get on the front foot and embrace technology to "fend off disruption" and protect their businesses.
"This is your sliding doors moment — you either move with the times and keep up these trends, or do nothing and watch the modern world pass you by," he said.
AUTHOR
Nicholas O'Donoghue
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