In her latest blog for IFA Magazine, Novia Global’s Linda Johnstone (pictured) identifies three key areas where she believes that platforms will need to be particularly nimble this year and boxing clever rather than being at risk of a knock-out
Boxing fans with a taste for the absurd may forever remember 2024 as the year of Mike Tyson’s ill-fated comeback. The former heavyweight champion’s preposterous skirmish with ex-YouTuber Jake Paul was more farce than fight.
In his long-ago heyday, during the run-up to a bona fide blockbuster bout, Tyson was asked if he was concerned about an opponent’s strategy. He famously replied: “Everyone has a plan until they get punched in the mouth.”
This could be a sentiment worth remembering as the platform arena becomes ever more challenging. Every one of the sector’s participants might believe it has all the answers, but the dizzying blows of real-world experience can quickly prove otherwise.
The most jarring haymakers in 2024 arguably took the form of almost relentless technological progress, heightened regulatory scrutiny and increased competition. Each compelled newcomers and established players alike to repeatedly adjust their thinking.
It seems highly likely that the same three dynamics will dominate again this year. So what can platforms do to avoid a devastating knockout in 2025?
- Keep pace with regulation
Regulation is often seen as a pain, and it almost invariably creates an additional administrative burden. The flip side, of course, is that any industry risks descending into a potentially perilous free-for-all in its absence.
The platform arena was the subject of a notable uptick in regulatory scrutiny last year. Take the Financial Conduct Authority’s Sustainability Disclosure Requirements.
The principal aim of SDR, as it is also known, is to prevent greenwashing by ensuring financial products that are marketed as “sustainable” are able to justify such a designation. Meeting its demands has been onerous for fund managers and platforms alike.
Novia Global was able to achieve SDR compliance in 2024. However, many providers are still grappling with the task.
Looking ahead, the overwhelming likelihood is that we will all have even more boxes to tick in 2025. Ultimately, all anyone can do is try to keep pace.
- Find tech’s sweet spot
Much the same can be said with regard to technology. In light of spectacular advances in fields such as artificial intelligence (AI), platforms are under mounting pressure to stay ahead of the curve.
The penalties for failing to do so are becoming alarmingly apparent. As outlined in an earlier article, there are growing fears that the ecosystem built on the relationships between platforms, DFMs and MPS could be under terminal strain.
This issue stems in large part from the use of software that is no longer fit for purpose. Tech that was designed when asset and transaction volumes were much lower cannot handle the inherent complexities of maintaining the ecosystem of today – less still that of tomorrow.
At the same time, the temptation to push the envelope too far has to be resisted. When we updated the back-office processes at Novia Global, for example, we aimed to be at the cutting edge but not beyond it.
It hardly need be said that new tech will continue to emerge throughout 2025. Not least as the AI revolution gathers speed, platforms and their stakeholders will need to distinguish between those innovations that are truly effective and those whose surface appeal is not underpinned by genuine utility.
- Thrive on competition
Against this daunting backdrop, the platform sector is becoming conspicuously crowded. Newcomers and incumbents alike are battling to stand apart in the eyes of prospective stakeholders.
On the whole, the barriers to entry for the first of these two groups are high. A new platform is likely to need more than an eye-catching look and an ostensibly state-of-the-art interface in order to survive and thrive over time.
As we have discussed here, the demands of regulation and tech are themselves sufficient to necessitate a substantial workforce, significant support infrastructure and considerable reserves of expertise. All this amounts to a big ask, which is why 2025 could see a flurry of arrivals and departures.
Yet this is not to imply the future of the sphere’s more recognised providers can be taken as assured. Irrespective of size, record or reputation, no platform can afford to stand still in the face of near-constant disruption.
Ideally, this should be a classic case of the old axiom that competition improves the breed. Let us hope so. As Tyson showed on many occasions during his tumultuous career, staying at the top is far harder than reaching it in the first place.
Linda Johnstone is Novia Global’s Head of Investment Proposition.
