Digital Transformation: From Tradition to Digitalisation

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Through the looking glass: digitalisation and financial service in South Africa

We’re living in the golden age of digitalisation. Although the financial industry in South Africa has seen significant progress in the last twenty years, and numerous financial firms have fueled significant amounts of capital into the South African market, the imperative to improve management and delivery of financial services in the region is felt more acutely than ever.

As Millennial investors enter the market, with a preference for digitised alternatives to banking, investment, advisory and brokerage services, financial institutions are on the brink of a technology-driven industrial revolution.

Technology providers have reacted positively to the new market conditions and came up with digital solutions aimed at bettering the bottom line for investors and taking the process management pressure off of institutional shoulders through automation and advanced data analytics. However, despite the undoubtable benefits that technological progress brings to the financial space, financial institutions in South Africa are still far from widespread adoption of digital solutions.

In addition to that, changing investor habits and tendency to opt for long-term investments, such as retirement plans or sophisticated portfolios built around ETFs, perfectly suitable for robo-advisory models, are the main drivers of the South African investment management industry.  According to a recent Statista report1, robo-advisers or digital wealth advisers in South Africa will likely see a rise of nearly 49.9% in AUM by 2023, in comparison to 2019, reaching a total amount of US$231 million from US$46 million reported in 2019.

In this highly competitive environment, financial services providers have to find ways to compete effectively if they want to funnel part of that capital into their business. Yet to do that, a structural change has to take place, starting with the technology underlying their business model. In order to keep up the pace with innovation and be able to develop and offer new financial products with the potential to raise the business’s cash inflows to billions of rand, financial institutions need to have more agile technology infrastructures in place.

Transform, not perish

Leaders in the South African banking sector, such as Absa, FirstRand, Nedbank, and Standard Bank were among the first to react to the new dynamics2. Challenged by the emergence of smaller players in the field, bringing about a transformational approach to the banking service, the four global banks were urged to pursue agile transformation programmes with an enterprise-wide impact on cost and operational efficiency in order to improve investor experience and maintain their position in the market.

However, while not all digital banks deliver on their initial promise, even market leaders are far from having a smooth path forward although they serve a sizeable market segment. Without innovation, they perish.

In this context, the advent of innovative fintech providers like Tradesocio challenges the status quo. Currently, the majority of South African financial services providers are still tinkering around the edges of tradition, relying on legacy IT systems, which often require a lot of computing resources and time-consuming maintenance work.

Yet this is only one side of the coin. The few financial enterprises open to change are still implementing ad-hoc automation strategies that do not reach too far past digitising paper-based processes. Albeit an important part in the innovation process, operations’ digitising cannot exist in a vacuum; financial firms need to create digitally-driven strategies and a long-term vision to further diversify their product range and offer a more streamlined investor journey.

Committed to a holistic approach to investment management and with a long-term vision to simplify the way investment products and services are offered, managed and accessed, Tradesocio offers an extensive range of versatile SaaS solutions for the financial industry, including separately managed accounts (SMA), advanced portfolio building and management (ETF Station), digitisation-enabled financial advice (Digital Wealth Advisor – DWA), as well as cutting-edge mirror and web trading solutions for brokerage firms (Mirror Trader and TS Trader).

To allow financial services providers to make their services more easily accessible to investors, all of these products and solutions have been scaled for web and mobile platforms. Fully branded and customisable, Tradesocio’s solutions easily meet the needs of both institutional and retail end users in terms of usability and data security.

Keeping data safe with SaaS technology

Notably, Tradesocio’s underlying technology is a core element in numerous AML, KYC, and RegTech applications used in the banking sector, but also pension management solutions. To achieve a high level of data integrity and availability, Tradesocio engineers have implemented multiple cutting-edge techniques combined with a versatile software architecture design, such as:

  • Distributed database architecture which helps provide high availability of data by storing data across multiple servers in different locations, with real-time multiparty replication.
  • Database server and Application server hosting in different data centers in strategic hubs around the world like Malaysia, Hong Kong, the UK, Australia, and Germany, which ensures high network performance. To avoid the occurrence of single points of failure (especially in the case of force majeure situations, such as power failure, natural disasters, etc.), Tradesocio’s infrastructure has been developed around Cluster. This concept allows proper load balancing among data centres (known as global load balancing), by directing requests to the nearest data centre(s) without delay, and thus preventing server overloading.
  • Periodical data backup running as additional data safety measures to ensure utmost data security.
  • Superior data encryption with a combination of 128 and 256-bit end-to-end encryption enabled with Tradesocio custom algorithm used to cyber-proof data, alongside SSL encryption.
  • Regular audits are carried out to ensure that all data is securely encrypted and there is no room for vulnerabilities.
  • Real-time monitoring through manual, automated and third-party network monitoring to identify any potential issues and take immediate action to avoid any interruptions of service and data loss.

By combining latest-generation technology with tested end-to-end encryption protocols and data security policies, Tradesocio creates the future of investment management, casting a new light on the provision of financial services. “The financial landscape is changing and financial institutions need to adapt to the new conditions or they miss out on opportunities. The only way to adapt is to embrace the change and rethink the way they offer investment services, and above all, change their perception of the technology underlying the provision of investment management services. The right decisions can only be made in a secure and transparent environment, which is exactly what we endeavour to create with our technology,” said Tradesocio CEO Wael Salem.

Digital is the new banking mainstream

Poised on the rim of digital transformation, Tradesocio’s technology paves the way for new managed account services, with an investor-centric approach.

Named simply “SMA”, the separately managed accounts solution offered by Tradesocio addresses the thorny aspect of outsourcing parts of the asset management process, which is all so familiar to asset and portfolio managers everywhere. Empowering financial services providers to create a unique digital investor experience (DIX), the novel SMA technology suite gives investment banks, asset managers and securities brokers a competitive advantage through real-time reporting, simplified onboarding, and advanced data analytics.

Among the numerous benefits that SMA has from an institutional perspective, noteworthy are: the ability to manage and offer multi-asset portfolios with ease; real-time monitoring of investors’ activity; allowing investors to access and monitor portfolio performance across web and mobile devices; keeping investors engaged using a dedicated Community channel to send them regular updates and market news; tailoring client-specific portfolios, using simple and complex modelling tools; real-time risk management, NAV calculation and reporting.

From the investors’ viewpoint, accessing a single view of portfolio performance in real time and handling multiple allocations from a single account, wherever they are on mobile devices, with the ability to start and stop the allocation at their own convenience, are the main advantages of the managed accounts solution by Tradesocio.

But this is not all, the technology company has more benefits in store for the potential adopters of its SMA, which can be easily branded and customised to the needs of investment banks, asset management companies, but also brokerage firms looking for a stand-alone alternative to MAM and PAMM implementations.

Further pushing the boundaries of digital innovation into the area of personalised portfolio development and investment planning, Tradesocio’s digital wealth advisory solution, marketed as DWA, and ETF Station, are top-of-the-line technology bundles for investment banks and asset management companies seeking to launch their own financial products. Both solutions come with a unique algorithm-generating engine which allows financial institutions to easily categorise and analyse large data sets that define investor interest, investing potential, experience and risk appetite. This allows investment managers to build bespoke portfolios and asset baskets around listed ETFs, AMCs, stocks, bonds and other instruments, but also create their own electronic exchange-traded products (E-ETFs) and offer them to investors, taking into account their investment preference and goals.

Additionally, making these solutions available to investment banks and asset management firms alongside mobile applications places Tradesocio at the peak of technological innovation. “We create new opportunities for investment services providers and investors alike, by making investment services less exclusive and allowing financial institutions to tailor more inclusive product offerings that will attract clients ranging from tiny retail investors with an investing potential of USD10 a month to high-net-worth institutional investors”, Tradesocio’s CEO explained.

In a statement to Raconteur3, Mr Salem also said that financial enterprises acknowledge the real benefit of offering mobile access to investment services and products, backed by transparent risk management and investor communities. “Financial institutions need to reduce lead generation and customer retention costs as they seek to increase lifetime value and boost investors’ trust in their services. Mobile applications tend to keep existing clients engaged and attract new ones by simply being available on the app stores”, Mr Salem added.

By bringing opportunities and investors closer and creating a transparent environment that fosters informed decision-making in the investment process, Tradesocio transforms the way we perceive investment management services and brings digital banking to the mainstream.

More opportunities for Forex and securities brokers

In addition to its advanced solutions for the HNWI sector, Tradesocio has also engineered a set of off-the-shelf technology products for the Forex and securities brokerage niche: Mirror Trader and TS Trader, both of which open a nexus of opportunities when it comes to multi-asset trading that more traditional setups cannot fully accommodate.

An advanced alternative to social trading, Mirror Trader is a secure and transparent infrastructure that allows brokerage firms to select from an extensive range of Mirror Funds available or launch their own multi-asset strategies developed around minor and major currency pairs, stocks, bonds, ETFs, CFDs, cryptocurrencies, and more.  In turn, investors can conveniently allocate funds to multiple strategies and monitor their performance in real time, in a similar way that they do with SMA. However, apart from starting and stopping an allocation, with Mirror Trader, investors also have the opportunity to increase or decrease the amount initially invested in one click. They can manage their risk exposure in the same way, on both desktop and mobile devices, which makes Mirror Trader a lightweight, cost-effective alternative to more traditional copy trading setups.

An advanced self-trading infrastructure, TS Trader provides a transparent, easy-to-use platform with multi-market entry capabilities, enabling access to 35,000+ widely traded instruments and global exchanges.

Brokerage firms looking for cost-effective, enhanced web trading solutions can conveniently connect their existing infrastructure without the need for development.

Developed as a full-scale trading environment, TS Trader benefits brokers and traders in multiple ways. Among the numerous advantages it brings to the web trading arena, noteworthy are: the enhanced capability to host multi-base currency accounts; fast execution backed by advanced order routing and book management.

From a retail perspective, accessible on desktop, mobile and tablet, TS Trader offers an unmatched self-trading experience and advanced indicators to help traders better analyse the markets, while the news channel keeps them up-to-date with the latest price actions on their traded assets.

While technological innovation may distinguish Tradesocio from other software providers, the company’s long-term vision and holistic approach to financial services translates to an intelligent go-to-market strategy which translates to flexible branding, customisation and localisation of services. To illustrate this, Tradesocio has created a demo environment – AvansFX -which offers financial executives the opportunity to step into the shoes of the modern investor and experience every step of the client journey from onboarding to investing and withdrawal, with a focus on enhanced usability and convenience of being serviced in their native language across a wide range of devices.

Enhanced functionality. Better acumen.

Most importantly, developed “as a service”, all Tradesocio solutions can be easily integrated with any existing infrastructure using an API connection. Financial institutions can adopt any solution individually or as a bundle, alongside TS CRM, a complete middle and back-office solution set which can easily serve the needs of investment banks, asset management companies, financial advisers, portfolio managers, as well as Forex and securities brokers.

Coming with a complete set of order routing and execution engine, Tradesocio infrastructure enables financial organisations to connect their liquidity providers using a FIX API standard connection and execute large-volume orders in a single transaction, and distribute orders across investor accounts with ease.

To simplify data collection, data analysis and reporting processes, but also to accelerate decision-making at all levels of the financial enterprise, Tradesocio applies a novel concept involving customisation of workflows and accessibility privileges: Workstations. This unique feature of Tradesocio’s CRM infrastructure allows executives in financial institutions to create dedicated workstations and implicitly, dedicated access for each individual Fund Manager, Portfolio Manager or Investment Adviser. In turn, this offers decision-makers “a complete picture of the entire investing activity executed through their platform, and it gives them full control over who-gets-what based on specific parameters,” said Mohamed Hassan, Product Manager at Tradesocio.

Envisioned as an advanced bundle of features, Workstations improve business acumen by giving financial admins access to the data they need in real time. Furthermore, with Workstations, executives or team leaders can create dedicated adviser or admin portals, which allow every adviser or employee with administrative authority within the financial organisation to set up workstations for specific investor groups. These workstations can be further automated according to investor-specific risk parameters.

In addition to this, thanks to its superior interfacing capabilities, TS CRM powerhouse allows easy customisation and real-time calculation of fees, commissions and risk profiles.

Promoting a unified approach to relationship management across the entire organisation structure of the financial enterprise, Tradesocio’s CRM solution accelerates decision-making and improves inter-departmental collaboration for a greater good: delivery of better financial services and more satisfied clients.

Thriving on an ecosystem approach

With deep roots in the financial technology ground, Tradesocio has managed to establish itself as a pioneer in the industry. Trusted by numerous financial institutions worldwide, the company created a comprehensive, all-inclusive technology and financial services’ hub for industry players known as TS Marketplace.

Aiming to level the field for all the stakeholders, TS Marketplace offers financial organisations the opportunity to choose from and connect to top-tier liquidity connectors like Interactive Brokers, Saxo Bank, or ADS Securities, payment gateways, market data providers, aggregators and other providers, or have their financial services promoted across a global network comprising of investment banks, fund administrators and software vendors.

Levelling the playing field for all the parties involved in the investment process, TS Marketplace is the place to be for providers of products and services across the financial sector.

Conceived as a greenfield for algo-trading enthusiasts, the platform is a valuable resource for brokerage firms seeking to expand their product range. TS Algo offers both strategy developers and financial institutions adopting Tradesocio’s technology, a flexible yet powerful tool which enables them, on one hand, to test and deploy strategies live, and, on the other hand, to select from the algo strategies available within the fintech company’s ecosystem and offer them to their clients.

In order to popularise their algos across Tradesocio’s ecosystem, developers have to meet a 2015 minimum 1:3 risk to earnings ratio. For more details regarding strategy assessment and deployment, contact the company at www.tradesocio.com.

Conclusion: In its endeavour to create a transparent and equitable environment for all the parties engaged in the investment process, Tradesocio has managed to build a complete investment management and trading infrastructure that balances out opportunities for both the retail and institutional sectors across the financial industry, and smoothes out the transition from traditional asset management to digitalisation.

Tradesocio will also host two seminars focused on Digital Transformation and the Impact on Investment Firms’ ROI in Johannesburg (02/10) and Cape Town (03/10). Some of the agenda topics include: the importance of digital transformation in investment management; the challenges of digital transformation explained; the impact of digital transformation on customer satisfaction, compliance and reporting, operational efficiency, and financial enterprises’ ability to build new revenue verticals, and other hot topics. To find out more about the event and to book your seats, follow https://tradesocio.com/south-africa/

About Tradesocio

Established in 2015, Tradesocio is a Singapore-based financial technology provider, with offices in the UAE, Cyprus and India, which takes pride in providing a wide range of custom solutions to financial institutions that allow them to diversify their offering, streamline their operations and develop bespoke financial instruments. Tradesocio changes the way investments are offered, managed and accessed, making the investment process easier for all the parties involved. For more information about Tradesocio, visit tradesocio.com.

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  1. Statista (2019). Robo-Advisors South Africa (Core country: data based on in-depth analysis). Available at https://www.statista.com/outlook/337/112/robo-advisors/south-africa
  2. Jorge Camarate, Chantal Mariz, Costa Natsas, Johannes Grosskopf (2018).  Digital Disruption in the South African Banking Sector. Available at https://www.pwc.co.za/en/assets/pdf/strategyand-digital-disruption-in-sa-banking-sector.pdf
  3. Leo King (2019). What is social Trading? Raconteur. Available at https://www.raconteur.net/finance/social-trading

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