It’s a material change in the way that digital can take advantage of Open Banking in the future and we are beginning to see Asset Managers take stock as to how this fits into their wheel house for their digital strategy.
Here are a few examples of how Open Banking could enhance the digital experience:
Simplifying On-boarding / Viability
The fact-finding / onboarding is the beginning of the adviser relationship and the first step in understanding a client’s needs. While the process is long, it is essential and does take up a lot of valuable time. This could be made more efficient / less manual if a client agrees to link their banking data as part of the on-boarding process. Some of the information that is normally inputted manually and upfront by the customer could be collected through the new API (Application Programming Interface) with the client only needing to validate the information. Much of the fact finder could become automated, freeing up time for the adviser to focus on the value-add, like gaining a deeper understanding of a client’s goals and aspirations – and using digital technology to offer solutions with interactive tools and hypothetical tools.
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Dynamic Financial Planning
Banking data would provide specific insights into how consumers manage their finances – spending patterns, savings, income, surplus funds, etc. This data could be collected in real- time and therefore has the potential to transform the way financial planning is delivered: from a static plan created at a point in time to a more dynamic process, automatically optimised when changes are detected in the client’s data. The plan then changes its risk or outcomes accordingly. For example, a client’s retirement cash flow plan could be automatically adjusted if their income levels have increased. An Adviser would not have known this unless they interacted ‘manually’.
The increasing focus being given to responsible investing cannot be left to pension pots alone, as individual investors demand the power to control how ethical their portfolio is. This is also partly a driver for firms to equip relevant investors with the skills – through online learning – and tools – such as digital portfolio modelling methods. Well-being has certainly become a key area for Advisers to focus on.
Open banking data could be used to create new tools that ‘educate’ customers into improving their financial decisions by delivering real examples and guidance as they spend, save and invest. The type of guidance provided could change as their transaction data changes e.g. customer becomes a) more proficient at saving and b) eventually leads to more sophisticated investment solutions like investment advice, say for instance, after they have built up to move up a risk band or outcome set of requirements – all of this information is hidden without the tools to help investors.
Personalised product recommendations wellbeing
Targeting Digital-First Clients – Millennials and Generation Z
In a digital-first world, how do advisers continue to attract, engage and add ‘human’ value when people live their lives digitally and have less time than ever to seek out advice. Reimagining the proposition for Asset Managers and Advisers will become essential in the coming months and years. We move to an age where millennials will soon be the largest pool of wealth in history and Open Banking is almost like their mantra.
The opening up of banking data will give Asset Managers and respective Advisers the unique opportunity to create new and inventive ways to grow and protect their client’s wealth and to attract new clients through innovation – digital- first at its foremost. It’s an expensive exercise, build or buy will be the board room discussion and all eyes will be on their digital leaders to tell them what to do!
Tools for the job!
The tool box of advisory tools is going to grow considerably, but the following are the mainstays;
- Dashboards – mapping customer goals against actual real-time data
- Hypothetical tools – enabling users to see their financial well-being and humanise their investments. Based on a multitude of life scenarios, marriage, children, promotion, redundancy, university fees, – retirement, etc.
- Human intervention i.e. Advisers – validation from a human that the strategy put in front of them has validity.
- Ability to be agile – moving investments will be just like moving your electricity supplier and the resul