Novia exec: Platform will scale through tech model not workforce growth

Barry Neilson, Novia’s chief commercial officer, said the platform intends to “sweat the technology” and not its workforce as it grows in assets and client numbers.

Following an overhaul of its management team, Novia is now focused on building layers of microservices on top of its core bookkeeping technology, powered by GBST. 

The platform has already added a Capital Gains Tax calculator, but over the next year Novia envisions housing an “ecosystem” of microservices, according to Neilson.

“The industry is littered with instances where platforms have done large releases that haven’t gone particularly well,” said Novia’s commercial boss.

“They've caused bugs and defects and impacted on their users. Whereas if you're built within a structure which is mostly microservices, rather than one big code base where if you change something in one part it may have a negative impact on the other part, you can just deal with small boxes of code. 

“That doesn’t have the same risk of contagion and reverse testing requirements that you would have normally.”

Finocomp, a Bravura-owned wealth management technology provider, is one of Novia’s microservices partners. The platform is keen to partner with other software firms, as well as build its own microservice layers.

There’s a big difference between scale and scalability.Barry Neilson

With £12bn of assets, Novia is on the smaller side of the advised platform market. While many of the bigger players push the mantra ‘scale is everything in this market’, Neilson is quick to challenge this.

Asked whether scale was a concern, Neilson said: “I'm definitely not phased”. He joined Novia from Nucleus, a platform with around £70bn of assets.

“The reason for that is I think there's a big difference between scale and scalability. If you go back 10 years, the biggest platform by a long way was CoFunds. They had £70bn, still struggled to make a profit, didn't succeed as a business and ended up being sold to Aegon,” said Neilson. 

“They had scale, but they didn't have scalability because their technology could not deal with the level of business that they were bringing in.

“I think that's a big challenge now. I mean some platforms will talk all day about the importance of scale. I don't think that's right. It's all about scalability. You have technology that means that you can scale your assets and your revenue line without scaling your cost base.”

I’d love to get to a point where we can double and triple the size of Novia, but we will do that through sweating the technology hard.Barry Neilson

Back in December, rival adviser platform Transact’s parent company IntegraFin Holdings published its annual financial results. It said administrative expenses had increased by £7.7mn, or 15 per cent, to £58.9mn in 2021 from £51.0mn in 2020. The increase, the platform owner said, was mainly due to an increase in staff costs.

“Recruitment of experienced staff has proven more difficult in recent months,” the firm said, citing Covid-19 as a reason for delays. That same day, IntegraFin’s share price was down more than 10 per cent.

Rather than hiring more administrative employees in response to growth - Transact’s inflows rose 38 per cent last year, hitting £4.95bn - Novia’s strategy is to “sweat the technology”.

“I’d love to get to a point where we can double and triple the size of Novia, but we will do that through sweating the technology hard, and having the right technology model. Not through having to double the size of our workforce,” said Neilson.

“Planning is important. But I think what’s more important is the fundamental design. When Spotify was designed, it was in a way that it could take on as many users as it wanted without having to recruit more people. 

“If everyone in the world suddenly moves to Spotify tomorrow, they’re not going to recruit anybody else to deal with that because the technology takes the strain.”

Neilson reckons platforms need to achieve a balance of in-house and third-party technology, in order to remain both open in terms of architecture, and flexible in that they are not totally reliant on one company.

Novia’s focus for growth remains firmly on independent financial planners. It has no plans to enter the direct-to-consumer market, like other platform providers such as M&G have done through the acquisition of Moneyfarm.

“The opportunity for financial planners is absolutely massive,” said Neilson. “Most advice firms are small, they struggle with resources. Our aim continues to be to streamline their admin.”

ruby.hinchliffe@ft.com