Nucleus is aiming to be the top dog of platform technology in the UK as it plans to pile £3m a year into its technology development.
Stuart Geard, chief financial officer at Nucleus, told FTAdviser the adviser platform had a “strategy to become the most technology enabled platform” in the country by increasing the proportion of employees that were involved in tech and investing continuously in its offering.
He said: “About a third of our total headcount is now in some form of tech specialist, and then we look to spend about £3m a year in external software development and upgrades to our platform.”
David Ferguson, chief executive at Nucleus, said the investment in technology was the “only way” the industry could scale up and become more efficient.
He said: “We’re all aware there is pricing pressure across this industry, and the only way people are going to scale up is when technology can do the heavy lifting.
“A lot of the platforms that come from the insurance industries are just glorified administration companies...there will come a time when the difference really shows.”
The comments come as Nucleus reported its profits had tumbled 64 per cent year-on-year for the six months to June.
Its half yearly results, published today (September 8), showed the platform made a profit of £1.2m for the first half of the year — 64 per cent less than the £3.4m recorded for last year.
Mr Geard said the fall in profits was primarily due to the fact the platform had decided not to cut back on expenditure as markets crashed at the start of the coronavirus crisis.
He said: “The lower profit was a pure function of lower markets and lower assets alongside a pretty high fixed cost base as we continued to invest in the proposition.
“We decided not to cut back on expenditure, and believe in the future of markets and the economy so when they come back, the profit will come back again.”
Nucleus increased its spend on technology and development by 50 per cent this year while its staff costs were 10 per cent higher.
Mr Geard added: “We would take the view that that is temporary. We’re not building a business for one year, we’re building it for a long time so that investment will reap rewards.”
It moved its system onto ‘the cloud’ — using Amazon Web Services — which now allows Nucleus to provide “much more intense processing and analysis” for its adviser clients.
Nucleus also introduced scanned documents and e-signatures onto its platform as a result of the physical constraints of lockdown.
At the end of August, Nucleus rolled out its discretionary fund management service, named IMX, in a soft launch for a few advisers.
Mr Ferguson said: “We rolled it out deliberately with a soft launch but we believe there is substantial opportunity for all existing advisers to improve value for money with IMX...it’s for anyone who can get a better deal from it.