The polished digital façade of a modern private bank can sometimes conceal a more brittle and complex reality: a tech stack strained by its own history. For technology leaders working within this environment, the strategic challenges are significant. And while industry narratives often highlight external market pressures and disruptive fintech, some of the most persistent barriers to efficiency and growth may still be internal.
“While much of the public discussion around digitisation focuses on innovations like robo-advisors and AI, the reality for many firms is a struggle with more foundational issues,” says Ludovico Niccolini, Sales Director, Wealth Management at TS Imagine, in conversation with TradingTech Insight. “They face day-to-day, straight-through processing challenges based on legacy technology, which present a significant barrier to productivity.”
This operational ‘bloat’, the accumulation of disparate systems and fragmented data, is not merely an inconvenience, says Niccolini; it is a critical technical debt that undermines profitability and stifles the agility required to compete in volatile markets.
Diagnosing the ‘Spaghetti House’ Architecture
These systemic inefficiencies can be traced, at least in part, to history. Many wealth management firms, especially large global private banks, expanded over decades through mergers, a process that often left regional offices with considerable freedom over their technology choices.
Niccolini explains the architectural consequences of this situation. “The problem often starts with outdated technology stacks. Add to that a business structure split across booking centres and you get decades of region-specific systems and IT budgets, resulting in a ‘spaghetti house’ hidden behind a single brand. This fragmentation makes it difficult for banks to become genuinely digital global players.”
In many cases, fragmentation has led to core functions such as client onboarding, risk calculation, and trade execution being distributed across different systems. For example, a client’s portfolio data might be stored in Geneva, while their trading history is recorded in a separate OMS in London. The absence of a unified data layer can add complexity, often requiring manual reconciliation and introducing operational challenges. As a result, delivering a seamless, multi-asset, global service remains a difficult goal for many firms.
The Compounding Cost of Technical Debt and Risk
The cost of maintaining this ‘bloat’ extends far beyond licensing fees. It manifests as a pervasive operational risk. When systems cannot communicate, human intervention, via telephone, email, or spreadsheet, becomes the default bridge, introducing errors and slowing down execution. Furthermore, the siloed nature of the data prevents a holistic view of exposure. In an environment where regulatory scrutiny is intense and market volatility is high, the inability to aggregate client risk and portfolio risk across all regions and asset classes represents a major blind spot for risk managers.
Moreover, the bank’s internal problems are exported to its partners and clients. “This internal fragmentation doesn’t just affect the bank,” points out Niccolini. “It creates friction across the entire ecosystem. End clients bear the brunt, struggling to reconcile and normalise the bank’s data into a single stream. Clients are effectively inheriting the bank’s legacy challenges.”
For asset managers and family offices, which frequently custody assets across multiple banks, the absence of data normalisation can create additional workload, as significant time and resources may be required to aggregate positions and execute orders efficiently. Without clean, unified data, private banks risk limiting the value they are able to deliver to these important institutional clients.
The Catalyst for Architectural Change
From a historical perspective, for decades, the conservative culture of private banking and strict interpretations of data sovereignty served to reinforce the status quo. “Progress was long stalled by a reliance on self-hosted systems,” Niccolini explains. “Modern cloud-based solutions were viewed as politically risky, given concerns over data security and banking secrecy. That mindset only began to shift when major cloud providers such as Microsoft, Google, and Amazon invested in regional data centres, finally making SaaS a viable and secure option.”
This cultural shift, combined with the operational shock of the pandemic, which exposed the fragility of systems that could not be accessed remotely, has made modernisation unavoidable. Technology leaders are now empowered to pursue solutions that were previously off the table.
A Blueprint for Unification and Agility
What if the path forward lies in moving away from custom-built, proprietary systems toward unified, scalable platforms? This possibility reflects a crucial strategic realignment amongst private banks. “There’s a growing recognition that their core strengths lie in advisory and client relationships, rather than developing and maintaining complex, siloed systems,” observes Niccolini. “This has led to a greater openness to adopting external platforms that can provide the required functionality more efficiently.”
According to Niccolini, the solution lies in addressing the key issues of connectivity, data, and normalisation. “The fundamental challenge is to unravel that spaghetti and make things work in a seamless fashion, creating an aggregated, normalised data layer that can provide a consistent experience for wealth managers, regardless of the underlying complexity,” he says.
This unified approach could potentially allow firms to replace dozens of disparate applications with a single, integrated platform, drastically reducing maintenance overhead and operational risk. By achieving true Straight-Through Processing (STP) and eliminating manual intervention, the client experience resulting from this unified architecture could be transformative. Niccolini describes the ideal outcome: “The goal of a modern, SaaS-based approach is a seamless, mass-delivered, single sign-on experience. In this model, a client can log into their familiar banking portal and transition to a trading environment that, while powered by a third party, is white-labelled to look and feel like the bank’s own system, creating a unified, semi-institutional package.”
By adopting this model, technology leaders may be able to shift their focus from maintaining legacy systems to delivering genuine technical alpha. Firms that manage to untangle their internal ‘spaghetti house’ and move toward a leaner, more unified infrastructure could gain greater operational efficiency and perhaps be better positioned to earn the trust and loyalty of the next generation of global wealth.
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