APIs, cloud-based tech and data analysis provide the opportunity to create a truly different wealth management experience that is more intuitive, interactive and insightful than anything on offer today, writes Mark Knowlton
The wealth management industry is on the brink of transformation, with changing investor demand, regulation and new technology sounding the death knell for giant, monolithic ‘one size fits all’ platforms.
With the rise of application programming interfaces (APIs), smart devices, powerful data analytics and artificial intelligence to personalise the customer experience, the advised platform of the not so distant future could look very different from what we know today.
Over the last 20 years, platforms have become an integral part of the adviser toolbox, simplifying administration and reducing costs. Yet currently much of what digital platforms do simply replicates the analogue world of the past with paper-based form filling.
Even today, wet signatures and printed application forms are often required to authorise some procedures on some platforms, adding to the cost, time and resource required from advisers to perform relatively simple actions, while also creating delays for the client.
Investors increasingly have high digital expectations, however, and providers’ complex regulatory obligations alongside margin pressure is forcing the industry to look at new ways to deliver the overall customer experience. At the same time, advances in technology are now allowing providers to innovate and move away from the digitalised paper processes most currently offer to create something radically different.
So, what will the platform of the future actually look like?
Conversing with platforms: Driven by the success of home smart speakers, voice will become an important factor in the advised platform market. Harnessing the technologies that underpin these consumer devices, platforms can embrace speech recognition and natural language understanding to redefine the financial advice experience through lifelike conversational interaction.
Advisers and investors will converse with their intelligent devices to deal with all processes from the initial security requirements to completing applications and transactions, creating a truly frictionless straight-through digital experience.
Process will be re-designed to reflect the way we, as individualistic humans, chose to interact; and we will finally see an end to old-fashioned form filling. Wearables and virtual reality devices will extend the richness of the experience, laying the foundation for a future where humans and computers are tied more closely together than ever before.
A more holistic view: Thanks to new open architecture and regulations around information sharing, we will be better informed to make wiser financial decisions. Savings and current account information can be combined more easily with investment and pensions to provide a single view of wealth.
Investors and their advisers will be able easily to manage cash holdings as well as investments, enabling better cashflow management and tax planning. Platform ecosystems, where services are amalgamated from different providers, may offer new and richer capabilities such as an integrated protection, banking and investment management alongside investment administration. The pension dashboard initiative will also form a key part of the aggregated experience, bringing together finances in one joined-up experience.
Smart notifications: Our food-delivery apps send us prompts to remind us when food is arriving, sport apps send us live commentary on our football team’s latest match and news feed apps provide always-on access to timely information. And helpful, time-sensitive and relevant smart notification can be beneficial in the wealth management world too.
Personalised prompts will remind customers to move money between accounts to cover bills and pre-set processes will automatically sweep excess money from savings to investments based on agreed criteria. If there are major changes to an investor’s accounts on-platform and key events take place, the platform could have the ability to take action on their behalf within pre-agreed boundaries.
This type of concierge service is long overdue in financial services and we increasingly expect to see platforms being able to offer a range of configurable alerts, meaningful insights and actionable outcomes to achieve better engagement, transparency and trust.
A world that revolves around you: The ability to analyse huge swathes of data due to ubiquitous cloud computing will allow platforms to become more personal and configurable, taking the customer through their own unique journey based on their circumstances, needs and preferences.
Information presented will always be relevant to the investor. Content will be personalised, based on smart data analysis to create a more insightful experience. Aggregating available data on a customer and combining it with machine learning, could allow providers to help meet an individual’s personal financial needs – for instance, by offering tips on saving for a house deposit, giving information on investing for children or providing guidance on retirement income choices based on the client’s profile. Speaking to customers about their specific financial needs at the right time will help generate better engagement and increase loyalty.
Faster innovation: The simplicity and low cost of adding and removing services will mean providers can trial new services or proposition enhancements without fear of expensive failures, leading to greater innovation. The modular nature of future platforms, with flexible micro-service architectures, means change can be localised, so reducing the cost of testing and the risk of largescale failure.
Platforms will continue to provide scale economies and re-use leverage for cost-efficiency, and be able to adapt to new regulations or changing customer needs quicker than older bespoke platforms. This speed to market will become much more of a differentiator for businesses, as companies who can react and adapt to change faster than their competitors will be able to seize market share.
The continued growth of the multi-billion pound advised platform market offers huge rewards for providers who get it right and are prepared to change and test new software. APIs, cloud-based technology and data analysis provide the opportunity to create a truly different wealth management experience that is more intuitive, interactive and insightful than anything on offer today. The platform of the future is within reach, the industry just needs to embrace it and start piloting new initiatives to break the mould.
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(Originally published in Professional Adviser)
Posted in: Wealth Management Administration
