The chief executive of Old Mutual Wealth has said there were concerns it would take too long to upgrade the platform if they stuck with their original technology supplier.
Old Mutual Wealth confirmed today (2 May) that it had terminated the contract with its original tech supplier IFDS, opting for rival FNZ instead, which is set to power the platform by the end of next year.
Paul Feeney, who heads up Old Mutual Wealth, told FTAdviser there were mounting concerns around the amount of time and money it would take to upgrade their platform if they stuck with IFDS.
“We said we wanted to get our platform in within a certain time and cost and we felt that with our previous supplier that this was likely to run over,” he said, pointing out that the upgrade would cost far more as a result.
While the upgrade with IFDS was expected to amount to costs of £450m, the upgrade with FNZ is set to cost between £120m and £160m.
“By making this move now, we can meet the times and costs we already outlined to the market, but with a lower risk and with a better proposition.”
Mr Feeney also said scale was an important factor, describing Old Mutual as a “big beast” which therefore needs an IT provider with the proven ability to deal with a large bulk of assets.
“FNZ have got an existing, proven system, and they have proven their ability to migrate large businesses onto that system.”
The decision to use FNZ as the preferred IT supplier follows a full market review by Old Mutual.
By using FNZ, the platform will have additional functionality, giving customers the option to tap into investment trusts, exchange traded funds (ETFs) and junior Isas, which was not immediately possible with IFDS.
With IFDS, it was expected to take an extra two years after the migration of assets to add these extra functions, which the platform will now be getting from day one.
The Old Mutual boss highlighted that FNZ now has the ability to dedicate resources to the upgrade.
“This is very different to the previous programme because we are now working with a fully-functional system that we can configure for our needs.”
Mr Feeney also said having a strong experienced team will help keep re-platforming costs down.
Figures from consultancy the Lang Cat estimate that FNZ is the tech supplier for around 20 per cent of the market.
Mark Polson, principal of platform consultancy the Lang Cat, said: "Sometimes there really is big news in platforms, and today is one of those days."
He said Old Mutual's announcement is probably the biggest strategic shift he has seen in the under-the-bonnet side of platforms.