Growing wealth-management businesses offer the latest round of decisions on whether to custom build or buy off-the-shelf

InformationWeek Staff, Contributor

April 23, 2004

3 Min Read

Lochan of Cap Gemini Ernst & Young says this is often the case in the industry. "You're not seeing outsourcing getting into middleware and data," he says. "This is very competitive. Even in outsourced solutions, the data will stay within the host company."

UBS, a global wealth-management services provider, is taking a largely in-house approach to wealth-management systems, and integration was one of the primary reasons. About two years ago, the firm decided that instead of tossing out its previous generations of wealth-management technology in favor of third-party solutions, UBS would internally enhance its systems to add functionality and meet new goals.

Scott Abbey, chief technology officer for UBS

UBS stayed with an in-house system for easier integration, CTO Abbey says

UBS started deploying the most recent version of the system, ConsultWorks, in 2003 and expects the process to last through 2005. "The goal for the current generation is to eliminate the boundaries between applications and task flow," says Scott Abbey, chief technology officer for UBS. The company's 7,700 advisers can conduct an array of functions, such as checking account positions, entering orders, conducting research, and taking notes, without having to navigate through separate applications.

Distinctions between front office and back office aren't necessarily relevant. The connectivity among desktop components and UBS's books and records allows information to be available in real time. "There are systems that are more back-office oriented and others that are more front-office oriented, but there are a whole set of applications and databases that are used by both the front and back office," Abbey says. "The integration and common stores are incredibly important."

Besides integration, UBS also has opted to build a contact-management system, called Relationship Manager, which went live in March. Initially, the company was going to use one vendor's universal customer-relationship-management system to replace its variety of third-party CRM applications. "It just failed," Abbey says. "The application didn't work" because of coding errors. Abbey declined to name the vendor.

UBS is unusual in its willingness to custom-build. "I can't see a scenario where it would make sense to build your own contact-management system," says Tim Tully, CIO of Mellon Financial's private wealth-management group, voicing the opinion of many in the industry.

However, UBS's Abbey insists that his firm's wealth-management platform already had most of the functionality of commercial high-end CRM systems. The incremental cost of adding CRM functionality to its own system outweighed the costs of implementing an off-the-shelf solution. "The value that will be added because of tight integration will be significantly greater than had we gone with an external system," he says.

Technology provides a competitive advantage for UBS, Abbey says. Even if third-party providers could develop the features the company wanted, it doesn't want to help a vendor build something it could resell to wealth-management rivals. "We'd be asking for requirements that are in many ways unique compared to our competitors," Abbey says. "We're not looking to give away that intellectual property."

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