We’re bringing to the market functionality for on-boarding and model portfolio services, INN8

Following the launch of INN8, the first investment platform business of its kind in South Africa, by multi-specialist asset manager Stanlib in May, SRP spoke to Mickey Gambale (pictured), the chief executive of the firm, about how the introduction of platform services with a client-centric approach that advisers can intrinsically relate to will help to grow the domestic structured products market, and how technology can also create efficiencies and free up time for advisers to focus on advising.

The investment firm identified an opportunity in the SA market for a purpose-built investment platform as none of the existing platforms in the country appear to have been built with the sole purpose of serving the IFA market, according to Gambale who is very familiar with structured products after holding senior positions at local providers MMI and Momentum.

"The systems currently used to run investment platforms are mostly old bank systems," said Gambale. "For example, the infrastructure used by platforms such as Oracle FlexCube, Compass, etc are traditional transactional banking solutions and have significant legacy issues which limit the technologies' ability to adapt to the dynamic and fast-paced change within the investment platform space."

INN8 is an open architecture offshore investment platform offering independent financial advisers new functionalities as well as access to collective investment schemes, exchange-traded products (ETPs) and anything that can be purchased via an exchange such as structured notes, warrants, etc.

"The platform is targeted at independent wealth managers and we're planning an onshore version to be launched at the end of the year," said Gambale. "The ethos and philosophy behind it will be the same, but will give South African investors the option of investing in South Africa. We're not an issuing platform, but this is something we will deploy in the future as we expand our offering."

The current focus of the platform is on building an equivalent platform for the whole South African market, according to Gambale. "Our plan is to increase our offering with new tools and functionalities around pricing and valuation, life-cycle management, post-trading, secondary market facilities and reporting, etc.," said Gambale. "The goal for our platform proposition is to be a full retail investment suite covering all products and assets so if an investor wants credit or structured products there is one place to find those products. A platform has to be able to offer everything, otherwise it's not an efficient platform."

Gambale points at robo advisors as an area where technology is not being deployed efficiently as they focus only on one product set. "We don't think that is a sustainable way to build a platform," said Gambale. "Some platforms are trying to box people into a one-size-fits-all approach, but the problem with that is that not everyone fits in properly: every investor is unique and you have to be able to meet their investment needs and risk profiles. Technology enables you to achieve this."

Platforms are also helping end investors to achieve their goals because advisers are able to access all the tools and products available in one place, according to Gambale. "Open architecture is the only way to offer a comprehensive set of products and, with the right technology and tools, you can service the intermediary market in a flexible way, which is what we're trying to do," said Gambale.

The INN8 platform has been created to offer "true straight-through processing (STP)" which gives it an edge in the market and a unique selling point. "In a worst-case scenario, our clients will be able to get into the market in 48 hours," said Gambale. "The platform has been designed and developed with financial advisers in mind, and provides the tools needed by advisers to navigate the market." According to Gambale, the platform also provides advisers with a hub through which to communicate with their clients and increases back-office efficiency. "The starting premise was to streamline execution and to leverage technology to improve and speed up processes," Gambale said. "The proposition has not changed, but the use of technology has helped us change the way we function and operate."

Gambale also noted that the platform will also act as a catalyst for education around structured products. "Investors need to understand the benefits of structured products for them to become mainstream," he said. "South African investors remain somewhat cynical towards structured products; they don't understand that a capital protected structure that matured returning the capital invested has done exactly what it was supposed to do. Rather, investors seem to think that the product hasn't worked because it did not deliver any yield."

Structured products "have to be seen as another instrument used to balance investment portfolios so as to provide a defined outcome", according to Gambale.

"Fund managers sell performance, but we think there's a need to discuss outcomes and risk management instead," said Gambale, pointing that structured products are underused. "We need to help financial advisers with the right insights and support about structured products and how to use them. We have launched 'INN8 Connect' as a tool to interact with advisers regularly and create a feedback loop between them and product providers. We like to use the analogy of the car's airbag to explain structured products: You have them and you hope you don't have to use them - but if you have to, there is a guarantee that the investment will survive a sudden market fall."

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