FNZ’s ‘Platform As A Service’ Offering – Wholesale Wealth Management And Cloud Computing

FNZ Highlights

• Offers Platform as a Service to Financial Services companies in the Wealth Managent area
• Helps to aggregate the back office functions in investment and regulated areas
• Wealth management support via PaaS is another chapter in the evolving Cloud Computing story

FNZ is a company providing IT solutions to financial service companies in New Zealand, Australia and the UK. Its four largest customers are:

1. AXA
2. J.P. Morgan
3. Standard Life
4. Friends Provident

Of these, the first three account for about 40% of its overall business. I recently had an opportunity to talk with Adrian Durham (CEO) about his company’s business, which is to provide Wealth Management platforms via Platform as a Service (PaaS) in the financial sector.

FNZ is a white label services wholesaler working exclusively in the Wealth Management area. It employs around 250 people worldwide of which about half are in product development in Edinburgh and Wellington. Its applications are based on Microsoft offerings such as SQL server, IAS and .Net.

Its services are being used by around 5,000 financial advisors (of which 3,000 are in the UK) who have business with around 500,000 clients; who in turn have invested around £10 billion with the support of FNZ’s services.

FNZ rents secure data centre space in four locations (Dundee, Edinburgh and two in New Zealand), which house 120 racks of equipment.

While FNZ’s approach is mainly to target the relationship between independent financial advisors and financial services organisations, it has three ‘channels’. In particular:

1. Advisory (financial advisors visiting customers at home)
2. Direct Internet business – JP Morgan has 70,000 customers connected from home
3. Workplace – allowing employees access to wealth management from the office mainly for company pension activities.

Adrian says the company offers its customers the advantage of not having to build their own aggregation services, a similar argument to the SaaS providers who help ISVs from having to develop their own billing techniques.

I described FNZ’s business to Kenny Hope (a financial advisor based like me in Didcot) to test his reaction. This is what he said:

• Wealth Management tends to be about investment and is most likely to be regulated. Compliance for regulated business is a major issue. You need to deal with a client’s tax position, attitude to risk and other factors. These mean it’s most likely that an advisor will always be used to acquire these services
• In terms of non-regulated business he already has Internet support for Life Insurance plans, which he can turn these round in a day or two, as long as there are no major complicating factors. He noted the development of online insurance offerings from Tesco, Direct Line and others
• Kenny does not work with any of the firms on FNZ’s customer list, although he confirms the intention of one of his companies to offer something similar. He does confirm that it takes a long time to process documentation and that a Web based system is the way of the future.

Kenny believes that PaaS approaches can help him and other advisors as long as a) they work, b) they’re compliant and c) the data security issues are ensured.

So from talking to both it looks as if FNZ are on to a good thing. Financial advisors, like Kenny, should get a speedier turn-around and the financial services company should avoid costly investments in developing an internal version of this offering. I’m no expert in financial regulations, but it’s clear FNZ knows how to deal with issues of regulatory compliance (in particular ISO 27001) and data security.

But is this Cloud Computing? I believe it is. In fact anything that is marketed with the name ‘as a Service’ should be considered as a chapter in this evolving story. It doesn’t matter that there’s no acceptable general definition; I believe ‘Cloud Computing’ will become as universally used over the next 2 years as the ‘Internet’ is today.