Bill Vasilieff is the Scot who hit the road south 30 years ago but is now back regularly in the capital, after his ambitious start-up took on the biggest players in the fund industry and landed the major contract at the heart of the reinvention of Aegon in Edinburgh.

Mr Vasilieff, a Kirkcudbrightshire boy who went to university in St Andrews, was in on the creation of the industry's earliest wealth "platforms" at M & G (Cofunds) and Skandia, before setting up an independent competitor Novia in 2007, in a market which has snowballed as platforms have become the new investment norm.

When two years ago Aegon, which had been left badly behind in the platform race, chose to outsource that key element of its business to Novia, eyebrows were raised. "When we started the business we were getting attacked by the established players, who were telling people not to touch us as we would go bust," the entrepreneur says.

After winning the five-year deal to build and administer the Aegon platform, "we found out we had been pitching against some very big names", Mr Vasilieff adds. "The only thing they could attack us on is the fact we were small."

Aegon is bringing the administration of its At Retirement Choice platform in house earlier than expected, creating new jobs in response to strong demand, but it has extended Novia's role as developer. Mr Vasilieff meanwhile says it remains "a very close relationship", and he is in discussions on other outsourcing deals, with the firm's new business already up 70% this year on a year ago.

He claims big companies such as Standard and Aviva have "spent an absolute fortune on platforms" without necessarily getting it right.

"The reality is that the market has changed, the consumer has become more powerful, and margins are going down, they are much lower than in the old market. When that happens, it is your chance to get a foothold."

After setting up the much-admired Selestia platform still used by Old Mutual, new owners of Skandia, Mr Vasilieff went looking for £10m to create Novia. "Private investors knocked us down a bit, that's what they do, and we eventually got £6.5m....we have now spent £14.5m. But our business plan was to have a maximum 120 people, technology does the work and we have a straight-through process – if people touch something, that makes hours (to pay)."

Novia was ahead of the curve. "There was a lot of cynicism that we were trying to cut costs, but margins were coming down. IFAs were a bit sceptical over the merits of platforms, now if you don't have a good platform they are up in arms."

This year is the year of revolution in the way financial products are bought and sold, with commissions already replaced by fees. Now the regulator is moving to disrupt the business model of the fund supermarkets led by Hargreaves Lansdown, by insisting that investors are charged separately for funds and for using a platform, prompting the widespread introduction of 'clean' share classes where investors can see what they are paying for. Already HM Revenue & Customs has called time on the opaque rebates to investors, much vaunted by the supermarkets as 'discounts', by making them taxable.

Mr Vasilieff says: "I think HMRC was the final nail in the coffin. We are sounding out our investors and none of them want unit rebates, the future is clean share classes. It is actually pretty easy to launch new share classes, a lot of them are already available to institutions."

He adds: "The end investor is very confused about the industry – even people in our office are confused about rebates. But the value chain has been broken down.

"The way life companies used to work was give them money, wait 25 years, and they give you something back. What did happen was they took huge margins. Now it's broken down to administration, investment, protection, platform, which allows chain transparency – you can see where every penny comes and goes."

He says small can be beautiful. "We have got half a dozen people who have built the platform and know exactly what they are doing, the big life companies know they need to be in the market, but don't really understand what they are trying to do.

"When you are building technology the biggest mistake you can make is changing your mind halfway through – it's enormously expensive, and technology companies like nothing more than people changing their mind."

Unusually, Aegon outsourced to a direct competitor in Novia, whose core business is in providing platform services to independent financial advisers.

But Mr Vasilieff says they tend to operate in different markets, with Novia focusing on independent regional advisory firms. "We have a sophisticated set of planning tools that other providers don't have, or have them but they are not integrated. What we are trying to do is take away the grunt work and free up IFAs."

The Aegon contract, however, is the bread and butter which gives stability as it builds its assets under administration. "There is a big funding gap between costs and income, and we are not allowed to borrow. What we are trying to do is shorten that gap as far as we can, because investors want their money back."