Bill Capuzzi is the CEO of Apex Fintech Solutions, advancing digital custody, clearing, and wealth tech for the next generation.
One of my favorite business lessons is perfectly articulated in a scene from the movie A League of Their Own. Coach Jimmy (played by Tom Hanks) tells one of his players on the all-female Rockford Peaches baseball team, “It’s supposed to be hard. If it wasn’t hard, everyone would do it. The ‘hard’ is what makes it great.”
The same can be said about fintech and, more particularly, about wealthtech. It’s hard, but it’s supposed to be hard.
The tremendous volumes of transactions we see coursing through global markets in microseconds on a daily basis are mindboggling. It’s no wonder the investing ecosystem relies on a complex web of technology, regulatory rules, compliance procedures, fraud detection and security measures, along with system continuity plans to make it work. Layer on top of that the rise in digital hybrid systems that blend tech-enabled experiences with human guidance, and the complexity grows further still.
The ‘Hard’ Truth Getting Harder
Nearly every day, we see fintechs running into one roadblock or another as they attempt to ease consumer access to money and investing. Recently, X Money reportedly was delayed due to regulatory challenges among other business pressures, while Robinhood is facing legal challenges and regulatory scrutiny for its predictions markets, crypto and social trading offerings. The massive ups and downs of the crypto players’ journey give dramatic testimony to the fact that opening greater access to money movement and investing to whole new segments of the population is just plain hard. But I would argue it’s worth the fight.
When it comes to the technology infrastructure underlying investing, things get particularly hairy. Because of the level of difficulty and multitude of factors that go into holding, filling, executing and settling a range of investments, there are only a handful of companies in the world that do that piece of it. Yes, there are thousands of wealth companies offering a slew of valuable front-end investor offerings, but when you look under the hood, you’ll find it comes down to far fewer managing the guts and the gears of the system.
But now, with the rapid changes in investor expectations and the convergence of traditional finance (TradFi), decentralized finance (DeFi), alternative investments (alts) and AI, that underlying infrastructure is being challenged to change from the ground up. So the very thing that’s always been hard just got exponentially harder. Remember, though, it’s the degree to which something is hard that gives it the potential to be great.
How We Get To Great
Change is always tough. Especially when it comes to underlying systems and technology that have worked pretty well for decades. They feel safe and reliable. It’s uncomfortable to move away from legacy systems. But more often than not, time forces us to change, and what many don’t yet know or fully appreciate is that for the infrastructure supporting a lot of the world’s wealth, that time is now.
Many of the wealth innovations you’re reading about—tokenization and other digital assets, alternative investing, overnight trading, etc.—all need new rails to support them and other offerings coming down the pike. It’s not only new asset classes that are necessitating a new approach to infrastructure; it’s the increased speed with which money and information need to move to satisfy investor needs. 401(k) participants today are no longer willing to wait two weeks for their RIA funds to roll over. Registered advisors don’t want to give investment advice on yesterday’s data. They need real-time movement, bookkeeping and ledgering.
All of these changes need a next-generation cloud and API-first operating system, if you will, to make any of it happen. A cloud-native infrastructure offers near infinite scalability, higher performance and better security. Newer systems that deliver real-time calculations and ledgers produce activities and positions data 24/7, enabling brokerages and advisors to move at market speed with one accurate source of truth across their investors’ accounts.
While the development of these next-gen systems has indeed been hard (in fact, it’s been a decade in the making), adopting and operating on them is a whole lot faster and easier than trying to launch new, innovative offerings on old systems incapable of handling them.
If the solution were only about software code, we probably wouldn’t be having this discussion. It’s equally about embracing a forward-looking mindset, letting go of old notions and expectations and seeing “new” as opportunity.
Of course, if any of that were easy, everyone would be doing it. You can be everyone, or you can be great instead.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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