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Platform consolidation blown off course by Brexit

    Platform consolidation blown off course by Brexit

    This year looks set to be a significant one for providers in the platform market, particularly when it comes to consolidation.

    Understandably, the uncertainty created by the largely unexpected EU referendum result could throw this current trend off course for a while.

    Currency fluctuations and share price volatility have the potential to put sizeable deals on hold in almost any business sector, while firms may also wish to wait until some of the many unknowns around the impact of the result are clarified, for better or worse.

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    The many ties between the UK financial services sector and the EU single market is something that any provider about to embark on a consolidation exercise will no doubt be all too aware of at present, particularly given the FCA’s warning of the ‘significant implications’ of a Brexit vote on financial regulation.

    But while all of this adds a significant element of uncertainty around if and when platform consolidation will actually come to fruition in the UK, it is worth remembering that the constantly evolving platform market has also weathered its share of tough market conditions in the past.

    Speaking of current challenges, the relentless pace of regulatory change alongside an increasingly competitive market has resulted in a number of providers finding out the hard way that being a platform is not as easy as you might think, and certainly is not the key to unlock profit margins at a level life companies might have been used to in the past.

    For some, this pain is being felt through their technology, with eyewateringly expensive upgrades being planned; although interestingly, still seemingly a long way from being delivered.

    For other providers, the consequences are more terminal, with an acquisition by a competitor the only realistic way out.

    Whenever consolidations are announced, our first thought should always be for the people involved. The shareholder returns, profit margins, business strategies and customer alignment are all hugely important, but this industry sometimes forgets the people working within these businesses – the good, hard-working honest people trying day-in-day-out to do the best they can – are the ones most immediately affected by consolidation and resulting cost-efficiency measures (read redundancies).

    Those providers who indulge in the opportunistic and crass schadenfreude at these times usually come out looking like heartless idiots. And any industry commentators would do well to remember this before wading in and dancing on the grave of a ‘failed’ platform.

    The regulator does a pretty good job of ensuring customer assets are protected through any consolidation or exit. Sadly, employment law does not provide individuals with a similar level of protection, and for many employees in platform land there will be some very tough times ahead.

    It is these very same employees who will also have to manage the significant challenges that can arise throughout the consolidation process. So, you know, spare a thought.