IBM climbs aboard wealth management platform

With an eye on the rapidly growing population of well-heeled Canadians, IBM Canada Ltd. and Toronto-based RPM Technologies Corp. have teamed up to launch a Web-based wealth management and customer relationship management (CRM) solution for mid- to large-size financial institutions.

The RPM Open Wealth Management Platform is an enterprise-class, Internet-based financial services framework that consolidates investment order management, portfolio administration and transaction processing on a common, desktop access point.

IBM will participate at the implementation stage, with its Global Services division supplying hardware, software and integration expertise to piggyback RPM’s sizeable platform onto a financial institution’s existing IT infrastructure.

According to Michael Biskey, Toronto-based vice-president of IBM Canada’s business innovation services, banks currently have a “customer information problem” because as clients use various products such as retail banking, mutual funds, insurance or credit services their financial and personal data stays locked in these specific channels.

This makes consistent, timely delivery of products and services especially difficult for wealthy customers with complex holdings, he said, citing a recent meeting with a financial institution that realized it had a problem after discovering its databases held twice as many records as customers.

“There is a fundamental disconnect (between banks and customers) evidenced by the fact that in the United States the average wealthy customer uses nine different financial institutions,” Biskey said.

Since 625,000 Canadians currently hold investable net assets over $250,000, and this number will grow to 1.5 million by 2005, Biskey said that financial institutions that choose to ignore these service problems are putting at risk the billions of dollars of revenue that result from service fees to the wealthy.

The goal of RPM One is to augment an institution’s existing systems by taking customer data, and various systems’ attributes and pushing them into a “middle-office layer” which offers not only an aggregated view of holdings, but allows straight-through transaction processing trough a browser-based desktop interface, said Dave Poppleton, the company’s president and CEO.

“The architecture we have with RPM is a message-based environment using industry standard XML messages. This allows us to present information in a consolidated, consistent fashion across more channels and through new devices as they come along,” Poppleton said.

For now, bank customers using RPM One will be able to examine their portfolio in real-time – on a PC or handheld RIM device – even as their financial advisor is making changes to it, said Karin Lindgren, RPM’s vice-president of strategic business development. This creates “a collaborative environment with customers as an active participant in their financial affairs,” she added.

Poppleton estimated that with licensing and integration, the cost of implementing the RPM One platform will range from $5 million to $15 million for a smaller insurance company, and $25 to $100 million for a major financial institution. A big investment, he acknowledged, but one that should pay off.

“Financial institutions have spent millions of dollars over the years building their IT systems do they don’t want to throw them out – they want to keep them. The challenge is to keep these financial systems in place and still solve the business problems that exist in the financial institutions,” Poppleton said.