How Private Banks Can Launch a Platform for Bankable Alternative Investments in Three Easy Steps

Building a Platform for Bankable Alternative Investments: Implementation Guide for Private Banks

Private banking institutions seeking to enhance their service offerings increasingly explore platforms for bankable alternative investments. These platforms serve as powerful tools for portfolio diversification and offer sophisticated investment solutions tailored to high-net-worth clients. This implementation guide outlines the essential steps private banks should consider when launching such platforms, drawing on best practices across the industry.

Strategic Manager Selection and Product Architecture

The foundation of any successful alternative investment platform lies in the quality and relevance of its investment offerings. To ensure alignment with institutional goals and client demands, private banks should develop a structured process for manager selection and product architecture.

Manager and Fund Selection Process

A clear and rigorous framework for selecting managers and funds is essential. The selection process should incorporate:

Evaluating Investment Managers

Banks should seek managers who demonstrate strong capabilities and credible track records. Key factors to evaluate include:

Performance History: Consistency and quality of historical returns

Investment Strategy: Alignment with the bank’s investment philosophy and target asset allocation

Professional Background: Depth of experience and industry reputation

Developing a Diverse Investment Menu

An effective platform offers exposure to a variety of alternative strategies, such as:

Hedge Funds: For clients seeking exposure to diversified, actively managed strategies

Private Equity: Targeting long-term capital appreciation through unlisted investments

Real Assets: Including real estate, infrastructure, and commodities for inflation hedging

Private Credit: Providing income-oriented alternatives with varying risk profiles

Client-Focused Approach

Understanding client needs remains a cornerstone of platform design. Banks should:

Conduct detailed analysis of client objectives and investment behaviors

Align products with risk tolerance and investment horizons

Implement feedback mechanisms to refine the offering based on ongoing client input

A platform tailored to specific client profiles enhances adoption and strengthens relationships.

Making Alternative Investments Bankable

Transforming alternative investment products into formats compatible with banking infrastructure is a critical step. Bankable investment products can be seamlessly integrated into advisory platforms, custody chains, and client portfolios.

Regulatory Compliance and Documentation

Products must meet local and international regulatory standards, including but not limited to:

Cross-border marketing permissions

Investor eligibility requirements

AML/KYC and reporting obligations (e.g., FATCA, CRS, MiFID II)

Thorough documentation—including offering memoranda, term sheets, and fact sheets—is vital for due diligence and onboarding.

Operational Infrastructure Setup

Setting up operational infrastructure involves:

Establishing fund administration, valuation, and NAV calculation mechanisms

Implementing investor servicing models that support onboarding, subscriptions, and redemptions

Ensuring compatibility with existing banking systems for trade execution and reconciliation

Technology Integration

Digital enablement is key to achieving operational efficiency and client satisfaction. Key technology considerations include:

Automated Data Feeds: For performance, risk metrics, and position reporting

Seamless Advisor Access: Via integration with existing portfolio management tools

Compliance Monitoring Systems: Enabling real-time checks and regulatory reporting

Document Repositories: Maintaining up-to-date fund documentation and audit trails

Alternative Distribution Structures and Vehicles

For enhanced scalability and accessibility, banks may explore distribution structures that transform alternative strategies into bankable, tradeable formats. These include:

Certificates for Offshore Funds

Wrapping offshore funds into certificates (e.g., Actively Managed Certificates (AMC)) allows private banks to distribute these strategies without direct fund exposure. These certificates, often issued by SPVs, securitization platforms, and financial institutions, are traded via clearing platforms, making them operationally compatible with wealth management infrastructure.

Securitization via AMC Platforms

Alternative strategies can also be securitized through AMC platforms, which issue structured notes backed by managed portfolios. These structures enable flexible customization, rapid go-to-market, and broader reach across jurisdictions without needing full fund registration.

ICSD-Compatible Listings

Listing funds or structured products on platforms like Euroclear or Clearstream allows for standardised processing of subscriptions and redemptions. Integration into international clearing and settlement systems enhances accessibility, simplifies custody, and facilitates cross-border investment flows.

White-Labeled Platform Implementation

Many private banks opt to deploy white-labeled technology solutions that integrate alternative investments into their advisor and client-facing systems. These platforms typically offer:

Core Features

User Interface Design: Optimized for advisors and clients with intuitive navigation

Product Profiles: Including strategy overviews, risk metrics, historical performance, and liquidity terms

System Connectivity: APIs and integrations with existing banking tools and CRM platforms

Advisor Enablement

Enhancing advisor capabilities is a key benefit of platformisation. Tools often include:

Portfolio Management: Custom portfolio construction based on client-specific parameters

Performance Monitoring: Real-time tracking and client reporting

Educational Resources: Research materials and strategic insights for client conversations

Client Experience Enhancement

A successful platform also elevates the end-client experience through:

Direct Investment Access: Enabling clients to access alternative strategies within their usual account structures

Transparent Information Delivery: Clear reporting on performance, risk, and fees

Streamlined Processes: Simplified subscription, redemption, and documentation workflows

Strategic Implementation of Alternative Investments

The integration of alternative investments into private banking platforms represents a meaningful opportunity to diversify client portfolios and expand institutional capabilities. A systematic approach—comprising manager selection, bankable structuring, and digital platform deployment—supports both operational excellence and improved client outcomes.

This guide outlines a three-step implementation strategy:

Rigorous Selection of managers and investment strategies

Transformation of products into bankable, compliant structures

Deployment of user-centric platforms that support accessibility and transparency

Private banks that take a thoughtful and structured approach to implementation will be better positioned to meet growing client demand for alternatives, while maintaining regulatory compliance and operational integrity.

Private banks seeking to enhance their alternative investment capabilities can leverage FundFront’s expertise in creating comprehensive platforms for bankable alternative investments. For detailed implementation strategies and solutions, contact the FundFront team. Email us at hello@fundfront.com or fill in the form on our contact page here.