Platform growth has accelerated across Europe. Assets under administration on platform are just shy of €2.5 trillion as at end of 2017. B2B platforms are four times bigger than direct platforms. While digital investing is the only way going forward it doesn’t have to be self-directed and there are structural factors fuelling the growth of platforms which support intermediated distribution.
The growth story is very impressive, but is it sustainable?
The traditional platform business is going to be challenged. Revenues from execution, custody (and rebate management where relevant) won’t be good enough business models. To remain relevant, platforms will act as WealthTech enablers and data hubs. Some of the larger platforms and wealth management groups have realised this and are building propositions with that in mind: Allfunds, UBS, BNP Paribas, DWS and Clearstream are good examples.
The other key characteristic of the platform of the future will be scale. There are platforms with private equity support which are well placed to grow through acquisitions. In the quest to reach scale through M&A, being “in the money” helps – as the Sainsbury’s CEO would confirm!
There are currently six platforms – including the UK market – above the €100bn AUA threshold. MFEX will be joining the pack having acquired Axeltis (France) and Ahorro Best Funds (Spain), both pending regulatory approval.
Scale helps platforms negotiate better fund pricing for their clients. In continental Europe, it also puts them in a powerful position to negotiate platform fees with asset managers.
Our European Platforms report is coming out soon – it’s an opportunity to get closer to an evolving market of 75+ B2B and 30+ D2C significant platforms