The Missing Platformization In The Family Office Space

In the last decade, ‘fintech’ has been the most quintessential buzzword in finance; evolving everything from traditional banking to payments, credit, savings, remittances, and insurance. It’s leading the charge in digitising and empowering the entire financial services ecosystem.

Family offices in India have been the custodians of intergenerational wealth management. A report by Empaxis states that an estimated 300 family offices collectively have an average AUM of $30 Bn as of 2023. 

The total wealth management market in India reached $429.1 Bn in 2023. This reflects a significant share of the wealth that family offices manage against the total wealth management market in the country.

However, as custodians of substantial assets, these private entities have traditionally been characterised by meticulous manual processes, extensive paper trails, and a reluctance to embrace technological advancements. 

This is where a change is imperative for family offices to modernise their operations or risk being left behind in an increasingly digitised world. Family offices are still in the nascent stages of determining the most effective systems for their daily operations.

As the Ernst and Young report rightly reflects, with the immense variety of tools and platforms available, navigating this landscape can be overwhelming, especially with the barrage of options from the sell side. 

For family offices, integration goes beyond mere aggregation of tools; it’s about unifying functionalities to provide a comprehensive view. This entails more than a conventional dashboard as a PwC Report states that family offices require dynamic, participative platforms that can keep up with their evolving needs. 

Strategising The Path Forward 

Would you believe that the implementation of a single robust platform can revolutionise family office operations, potentially saving up to 60% of time spent on routine tasks?

The adoption of technology among family offices follows a U-shaped curve, with initial resistance giving way to gradual acceptance and eventual habit formation. Technology remains a key factor, necessitating a shift in behaviours and habits but realising these efficiency gains requires a concerted effort towards intent and behaviour change.

In addition to providing a holistic view of portfolios, platforms must facilitate collaboration, information sharing, and timely execution of routine tasks on a daily, weekly, and monthly basis. 

These functionalities are essential for fostering efficiency and transparency within family offices. Family offices view themselves as businesses, necessitating the adoption of professional platforms tailored specifically to their needs. These platforms should streamline operations while accommodating the unique complexities of family office management.

Disparate systems persist due to their familiarity and ease of operation. Rather than complete reinvention, the solution lies in marrying familiar interfaces with modern backend systems, ensuring a smooth transition to digitalisation. 

Family offices are eager to embrace new platforms, provided the process is seamless, quick, and requires minimal intervention.

High turnover rates pose a challenge for family offices, as new team members must navigate steep learning curves. Platforms designed with user-friendliness in mind can mitigate this barrier, ensuring continuity even amidst personnel changes. 

As family offices grow in size, complexity, and jurisdictional reach, virtual platforms become indispensable for preserving institutional knowledge and ensuring continuity across generations. 

As the saying goes, “Tomorrow is a very different picture”, family offices that embrace change today will emerge as resilient institutions capable of navigating the complexities of tomorrow’s wealth management landscape. 

The number of family offices is expected to reach about 1000 from 300, as per Empaxis. If 60% of the time spent by family offices is refrained from routine tasks, it is evidently indicative that family offices will take ownership of a significantly substantial amount of the total wealth management in the country. 

By integrating robust platforms and fostering a culture of collaboration and innovation, family offices can not only enhance their operational efficiency but also strengthen their position as key players in India’s evolving financial ecosystem.