All Activity

This stream auto-updates     

  1. Last week
  2. Earlier
  3. Today’s purchase by Aviva of a majority stake in Wealthify has significant implications for the whole UK robo advice community and wider personal savings market. This move by the world's 12th largest insurer and a major asset manager is far more significant than the previous investment by LV= in Wealth Wizards and other UK robo deals. Aviva have a far greater degree of scale and partnerships that can be leveraged to the advantage of both businesses. Aviva have been a real leader in the digital revolution with the London digital garage having set the trend now being followed by many of their peers. While the deal keeps Wealthify as an independent business located in Wales it provides Aviva with an opportunity to open many doors for the company and harness a slick platform designed to appeal to a constituency that thinks and behaves in very different ways to previous generations. From the Wealthify perspective they no longer have the constant worry about access to capital to grow, no small benefit. Aviva already have a Direct to Consumer platform, built on FNZ technology for investors who are looking to go the DIY route to invest in a diverse range of funds. What they did not have up until now was a simple solution for those customers who do not want to spend large amounts of time managing their finances, but are seeking an easy way to invest for their future. It would be natural to expect Wealthify to move into pensions and Aviva’s knowledge in this area should be a major benefit. Whilst they would be wise to let Wealthify develop their own pension product, using Wealthify technology to support their substantial workplace pension and auto enrolment proposition would also be a smart move. As I have identified elsewhere this week (a link to the column will appear here on Monday) there is a compelling argument for focusing the Pensions Dashboard project around millennial auto enrolment customers in the short term. Adding the sort of execution capability Wealthify have to an Aviva Dashboard could deliver a powerful and compelling proposition to young savers. I am not at all surprised by this move; the US market typically runs two to three years ahead of the UK in the digital wealth arena. With this deal Aviva are emulating BlackRock’s 2015 move for Future Advisor and Invesco’s 2016 Jemstep buy by acquiring robo firms early rather than build their own in order that they could quickly partner with other financial institutions and distribution businesses. We have recently seen Blackrock make a substantial investment in Scalable Capital, the Anglo German robo firm, so Aviva are right to secure one of the more attractive firms available. There has been much debate of late around the cost of customer acquisition for start-ups with perhaps too much focus on the amount of money burned by Nutmeg who really had to break entirely new ground as the very first player of its type in the UK. If you happen to have 9,000,000 consumers, as there are on My Aviva, you do not actually have to hit too high a conversion rate to start achieving some very worthwhile numbers This move will cause Aviva’s peers to question if they are now at a commercial disadvantage particularly when trying to build partnerships with building societies and other savings institutions. It could also have a substantial impact on the asset management community. Do Aviva Investors have a significant advantage over their peers with an innovative new route to market? In my view the UK asset management community is for the most part failing to recognise the opportunity to leverage simple robo solutions which whilst a tiny percentage of the market today will have obvious appeal to the next generation of savers. There are unlikely to be enough robo advisers to supply demand from all the institutions who will wish to acquire one so they can maintain their competitive position. Primary players in this market will not want to be reliant on robos owned by competitors or others who may not always priorities their development agendas when it matters most. Unambiguous ownership will always settle such issues. Personally I can still see room for some Robo 3.0 start-ups emerging over the next year. Buyers will however need to have a clear understanding of what represents the good, the bad and the ugly in this sector if they are to spend their cash wisely. There are some that are very attractive targets and a few I would not want to go anywhere near. This deal may also provide significant opportunities for Aviva to deliver other products such as life and personal lines insurance to the attractive Generation X and Millennial demographics targeted by Wealthify. While the deal opens many opportunities the hard work is yet to be done and it will be at least 2 to 3 years before we can see the benefits reflected in Aviva results.
  4. New PFM techniques demonstrated at Finovate have the potential to facilitate totally new ways to help consumers get the savings habitat Last week’s new expanded format Finovate shone, as always, a spotlight on a diverse wealth of exciting ways to use technology to enhance the financial services industry. One of the challenges of attending the show is there is so much to take in. Rather than try and address multiple areas in a single summary I’m going to break down my review of the show to look at different areas. In a separate blogs I will consider the solution that for me was the overall highlight of the show, presenting quite simply the best US automated advice service I have ever seen and in a further summary I will look at the other presentations which fall outside my normal focus of WealthTech but provided stimulating ideas which I intend to progress separately. In this blog however I want to focus on a subject which is increasingly important to the UK market in the run-up to the launch of Open Banking next January. This is what has historically been known as Personal Financial Management tools, however increasingly the technology suppliers offering solutions in this market are trying to rebrand the services into different definitions. For me PFM works very well however it appears these organisations want to be seen as delivering more than just aggregated information. There were three different presentations from organisations in this field which really stood out to me at Finovate Fall, each was exceptional in its own right. I have long been a huge fan of MX, indeed I would go so far as to say in my opinion they are the best in the world at Personal Financial Management and aggregation. Rather than display their latest innovations as they frequently do at Finovate their team focused on hard numbers that make a compelling case for embracing these services. If non-customers who adopt a bank’s PFM are three times as likely to open a current account within a year and typically deposit four times as much money does this not make a strong case for delivering similar services to pensions and savings customers? MX have reputation for achieving adoption rates way beyond their competition and attribute much of this to the breadth, depth and quality of aggregation data cleansing and enhancement. This should be a key factor for UK PFMs to consider. Another key point they raised was the importance of high app ratings to get people to download and use them. Apps with 2 stars will typically only achieve a 15% download rate and 3 stars only 46% download compared with a 96% download rate for 4-star apps. This translated to a six-fold increase in use where business switched from low-scoring apps to higher rated ones. Clearly getting positive app reviews should be at the centre of any roll-out strategy. Moven are a highly respected name in PFM who have quietly entered the UK. After launching with TD Bank in Canada and Westpac in New Zealand they opened on these shores in February. I believe Moven’s service can provide huge benefits to the pension industry. In my view few pension providers fully recognise the potential impact of the pending rises in auto enrolment contributions will have on customers on national average earnings. At this level of income it is not that people don’t want to save but that they are under such financial pressure that they can’t afford to save unless we can help them find economies. Moven users are typically able to reduce their discretionary spending by between 4% - 8% per month. In addition, the service enables users to identify things they want and save towards them. It helps them track multiple goals and prioritise them recognising that users won't be able to achieve everything they want. Nudges are provided to encourage positive savings behaviour and recognise when reductions in discretionary spend have been achieved. The service will also identify further economies a user can make and it’s really easy for them to set personal spending targets. Looking at the practical impact their new “stash” Service has actually resulted in 25% of customers opening savings accounts even though no interest was offered! To me that seems to be exactly the sort of services pension providers should be deploying to help auto enrolment customers adjust to the increased contribution levels coming in the near future. As there are interactions directly at the operating system level within mobile devices we are able to provide far more intuitive and instant notifications. Currently Moven haven’t deployed all their capability to the UK but based on their ability to deliver rapid deployment and recognition of the use of such services in a long-term savings environment I see them as an organisation who should be on any supplier shortlist for potential institutional delivery of PFM. Yodlee’s Finovate presentation was strongly focused towards the savings, financial wellness and wealth management industries. The influence of parent company Envestnet is clear to see. From my own conversations with Envestnet I know they saw Yodlee as the silver bullet to complement their impressive range of technology solutions for institutions and advisers. At the show they demonstrated a Financial Coach powered by Artificial Intelligence. Big data sets are invaluable when building AI so Yodlee being able to base their analysis on over 23 million users, accounting for $20 trillion spending, income and investment data provides a strong foundation. The financial coach monitors an individual’s spending, saving, borrowing and planning, and provides suitable guidance. The process begins by looking at an individual’s spending/income ratio and timeliness of bill payment. In the context of savings the service considers an individual’s provision for emergency funds and also their long-term savings plans. A traffic lights approach is taken to identifying situations where additional guidance would be beneficial based on mining the 70 billion transactions in their records. People like you analytics, geolocation, and discount offers can be used to identify potential savings. To me these are potentially powerful tools that could be used to build significant trust with customers, my only question is to what extent will they have been localised for UK use. If you are interested in understanding more about how Personal Financial Management can transform customer relationships in pensions, savings and wealth management see our new insight study, “Personal Financial Management- How to fix the UK’s Broken Relationship with Savings”
  5. This week I am in New York for the opportunity to see the very latest wealth technology innovations and to hear from several of the industry leaders who are transforming the way Americans access financial advice. Now in its third year, the In|Vest conference provides a heady mix of powerful tech demonstrations and exceptional thought leadership. For me the big message on day one of the show was machine learning and artificial intelligence is now part of the emerging landscape. In what follows I will highlight some of the early leaders. The volume of these offerings on display makes me feel the US may again be pulling ahead of the UK in FinTech and especially WealthTech. After a brief opening where Salesforce highlighted that their forthcoming 2017 Connected Investor research will identify that 47% of investors would be happy for artificial intelligence to used by their wealth management firm the day began with a whirlwind of demos of disruptive technologies. The videos of these will be up on the In|Vest website at in a few weeks but in the meantime here are my highlights. First up was Salesforce with their Financial Services Cloud providing great visualisation of relationships, interactions and delivering insight. It is clear from the number of integrations Financial Services has in the US that the American proposition is a long way ahead of their UK offering but this does give an indication of where Salesforce may be in the UK in a couple of years. That said while the system can offer some awesome integration of consumer data I wonder how much of this would be allowed in Europe post the introduction of GDPR next May. This makes me wonder if the European Union and Fintech are on a collision course. I am increasingly worried that the excesses of GDPR and the EU’s inability to produce timely regulation could seriously damage the EU Fintech industry. Robert Stanich of IBM Watson showed how machine learning can identify clients at risk of leaving and how using artificial intelligence can transform client segmentation all beyond recognition. The service can also predict real life events and related product opportunities before your clients realise they have these needs. Watson has the potential to transform lead management so your existing data becomes your primary source of new business opportunities. Oranj showed a great onboarding experience with held-away data and risk profiling but fell foul of the eight-minute rule so ran out of time to show their full services. Comarch showed a very cool voice-controlled interactive artificial intelligence chatbot called Devra. Advicent showed great life protection tools they have built which makes me wonder why the cool omnichannel protection service they built for Scottish Widows never saw the light of day. An opportunity missed. MX then arrived to show why they do aggregation, categorisation and user interfaces for Personal Financial Management better than anyone else in the world. It is a great shame they don’t want to come to the UK as they have so much business in the States. Circle Black, a company that is entirely new to me, showed a stunning client facing tool set with API integration into Redtail, MoneyGuidePro, Riskalyze and many more. Fidelity owned eMoneyAdvisor showed new marketing tools advisers can adopt to transform the way they use and manage social media and then onboard the resulting new clients. I continue to believe there would be huge benefits in Fidelity bringing their offerings to the UK. InvestCloud showed some of the over 200 Apps their adviser clients can use. I love the vast amount of data they are making easily available to their users and the virtually endless look, feel and design features advisers can adapt. They are featured in the next update of F&TRC’s Adviser Software Insights study and have just set up an innovation centre in London so I will probably be looking at them in far more detail soon. Riskalyze describe their role as protecting consumers against their worst decisions. I am a big fan of how they present risk to clients. To me it is so much better than stochastic pods. This is all about talking to clients in ways they understand. Their Autopilot approach with its One-Click Fiduciary makes a great case for the FCA reviewing the UK client money rules as it can offer better consumer outcomes at significantly lower cost. One of the biggest moments of the day for me was Hello Wallet founder Matt Fellowes, the man who transformed financial wellness presenting his United Income business which aims to transform retirement income. This makes it beautifully simple to understand how clients are doing then build and achieve financial life goals. It is great to see United Income building plans taking consumers to +100 years stretching savings to match increased longevity. I was also impressed by DataRobot who are delivering a quick way to benefit from artificial intelligence, something I believe advisers can make huge gains by embracing Onist were one of my favourites from Finovate Spring and it is great to see them at In|Vest with their Family Office for the masses. I would love to see some of the artificial intelligence tools shown here added to Onist. The afternoon session was opened by one of the most compelling speakers in the US advice market, United Capital ‘s Joe Duran. Outlining why advice firms need to be both extremely human and extremely digital, whilst insisting that the planning process can be fully digitized, he argued humans need to do to things machines cannot i.e. provide empathy, understand human behavior and provide expertise and judgment to help with complex decisions. Charles Schwab CTO Timothy Heier pointed out we are no longer in mobile first phase, now it must be artificial intelligence first. This shows the era of AI in financial advice is now upon us. Mark Goines from Personal Capital highlighted that 65% of people who ever linked an account are still connected to them because they give them constant updates of good insights. He was followed by Bill Crager of Envestnet, who own Yodlee, who believes that a key component of building advice relationships with clients in the future is about giving consumers an integrated financial plan updated every day. This will actually provide a very gamified experience and I can see how it would have a similar effect to social media, we all want our regular fix of information and can’t resist looking at it regularly. These will bring together consumers short term and long term financial lives with information they want to access regularly. Crager sees artificial intelligence delivering answers to financial questions based on the data the adviser will have aggregated via these services. These last two issues are very relevant to the challenges that will emerge as banks re-enter the financial advice market which I will be exploring in my Money Marketing column next week. Through an invigorating and exhausting day the consistent message was we now need to start complimenting traditional advice services with unparalleled data and artificial intelligence to deliver a superior customer experience. This has been a quick canter through my highlights of day one of In|Vest I will try and add more detail from my notes over the next week or so, so please revisit this page for an updated view. I will report on the second day of the event soon.
  6. Honest. Constructive. Objective. No Bull. We all have a comfort zone at work. Topics which we could talk about until the cows come home. WealthTech propositions are my bread and butter, they sit very comfortably in my ‘safe place’. A number of new tools, ‘artificial intelligence’, ‘machine learning’, and ‘deep learning’, have rapidly crept into the WealthTech space. These self-teaching systems are busy revolutionising many industries. WealthTech is no exception. You need to ask yourself whether you want to jump on the train and work them into your ‘safe place’, or rather wait for the next train to pull in. My fear with the latter is that you'll be late! It’s true that artificial intelligence has been around for decades, but for the majority, it’s something we have typically reserved for the latest James Bond movie. These tools crop up regularly in our research. I talk in length to various proposition owners about how these technologies are being implemented. More often than not, they are on their ‘to do list’ and still to be added to their roadmap. “I’ll get back to you on that Kerry” “We can’t disclose anything at the moment, but we’re working on it” There is a lot of chatter about these innovative technologies. A few firms are already rolling out such services in the real world. It's these that I want to take a look at today. To the majority of us, it’s something new. You need a certain level of skill to understand how it works. Your brain needs to tick a certain way. It’s not always important to understand the inner workings of these technologies and algorithms. It is important however, to understand how they are going to change the way we design and deliver financial services. Hedgeable Every now and then I speak to an organisation which turns everything on its head. This is exactly what happened when we met Hedgeable. They are primarily a technology company. Having successfully developed and deployed its own digital wealth platform in the US in 2009, the company decided to open up its architecture and partner with organisations across the globe. The technology consists of four key open application programming interfaces (APIs). Partner organisations will use these open APIs to form the infrastructure / back end of their digital wealth proposition. The API’s are available on a modular basis so you can pick and choose which ones best suit your business. Hedgeable’s co-founder, Mike Kane, described the process as ‘plugging in’ their API’s into your existing framework. Once you have the back end in place, you can add on a number of optional customer facing modules. One of these, being a truly fascinating artificial intelligence module. The following video from the recent Finovate Spring conference gives a great feel for the system. Hedgeable AI Lab Digital Wealth Insights analysts are producing a more extensive analysis of Hedgeable’s functionality which will be available from this site shortly. Abaka We recently reviewed Abaka’s intelligent savings proposition targeted at employers looking to improve the financial wellbeing of their employees. (see their full review here) What makes Abaka different from other workplace propositions is that its powered by artificial intelligence and delivered via both a mobile App and a chatbot called AVA. This technology collates and translates the employee’s data to provide insight and nudges into their personal financial life. It also provides comparisons of their financial life against that of their peers or others with similar circumstances as themselves. Crucially, Hedgeable and Abaka are both LIVE physical propositions available to use in the UK today. We are in an era where technology can take our data, read it, understand it, and provide us with proactive insights to make changes before reaching a particular unhealthy situation. Over the course of the next few months I’ll be looking at ways in which artificial intelligence is changing the way we develop and deliver financial services. I highly recommend getting on the artificial intelligence train sooner rather than later. Step out of your comfort zone. It’s incredibly exciting!
  7. Honest. Constructive. Objective. No Bull. Never has a term rung so true. Many loud, rambunctious and confident announcements have been made in the press and via social media the past six months about the launch of innovative, industry changing, kitchen sink inclusive, WealthTech propositions. In the hope that a new proposition will be well received and communicated to our audience, we are approached by these organisations, with much gusto, and told of the wonders of their tools. That’s not how we roll. When it comes time to lift the actual bonnet and start our review, the process is promptly placed ‘on hold until further notice’. Why? Is there nothing to show for all the chatter? A particular favorite of mine, are the three savings or budgeting applications that I downloaded onto my mobile last year which claim to automatically assist you find various savings. Still pending! Large traditional institutions have called in with incredible enthusiasm, announcing the imminent launch of their very own robo adviser. When it comes down to the details, suddenly everything goes dark. Readers with roots in Africa, will relate when I liken these propositions to the feathered phenomenon, the Hadeda bird (Football fans may identify more closely with the flying vuvuzela!) "haa-haa-haa-de-dah" 'Marketed but not yet launched’ is the official standpoint. ‘Jumping the gun’ or ‘all talk and little action’ may be a couple of ways to explain it, but my gut tells me that neither of these is typically true. Understandably, it’s important to create interest, establish positioning, grow your beta community, engage the industry and entice investors. Equally, we are talking about a regulated environment here, so crucially you would have to get your compliance on point. I wonder however, whether this premature marketing launch instead harms a proposition’s first impression and opportunity to capture their target audience. From my perspective, I can't help but feel disappointed and slightly skeptical. Importantly, I'm not talking about the odd hadeda here and there! I'm talking about a full on flock of these big flappers. Vaporware assumes that the organisations making these announcements have no intention of actually releasing the tech / functionality any time soon. Again, my gut tells me that this is not the intention, but rather a cautionary trend within the UK industry. We simply seek perfection before taking that first step. Please, don’t miss the boat! Waiting for the perfect product could take months or even years. Each month that goes by, another few propositions are launched, taking a chunk out of your target audience. Get the fundamentals right first. Absolutely. But then go for it! Introducing new and improved functionality as and when you have it has many advantages: · An agile development process can be exciting for users. · It shows them you are continuously adapting and evolving. · You can change your priorities according to demand and not a deadline. · It will force you to innovate from within more regularly. Be honest with your audience. Tell them what is coming. Tell them how you are building things to benefit them. Ask them for help and then tell them you listened. Reward them for their loyalty. People like honesty. Approach your users with your cards on the table. You will be giving them a reason to stay. That better day may never come. Your competitors are already leaving the harbor. Stand up. Be present. Be brave. Own it. Launching a half-baked proposition today without all of the ‘bells and whistles’, may put you in a better position than if you waited for that perfect bake.
  8. For me the outstanding demonstrations of the second day came from companies who were really throwing down the gauntlet to challenge conventional thinking and showing services that could transform major parts of the financial services industry in a very few years. These almost all focused on making more use of non-traditional forms of data to improve customer services, outcomes and achieve greater profitability. When considering these in this context it is important to recognise that Finovate rules preclude firms showing vapourware service that are not yet built. While many offerings presented are still in their early stages slides and videos are prohibited, you have to show real software. From the perspective of most traditional financial advisors the session from Hedgeable AI will be the proposition they will consider most controversial. Co-founder Matt Kane predicted that we will not need financial advisors for most of their current tasks within a few years. While presenting his artificial intelligence bot Katana he said he believes this will be capable of doing anything a financial advisor can do. As part of the presentation Kane referenced a recent study identifying that as many as 61% of all jobs in the US financial service industry could be replaced by bots. Speaking to CTO Sid Sharma after the show he suggests you don't need advisors to do most of what they do right now, but accepts they are needed for more complicated stuff, “not for things like to checking to see if you are on target to meet your goals or selecting portfolios”. He identifies that “trust needs to be established but who said it had to be by a human”. At this point I suspect that there will be some readers of this blog on the verge of cardiac arrest. My own perspective is that while eventually I do see financial planning and advice as services that within a couple of decades will be fully automated, and indeed virtually invisible I believe that point is at least a decade and a half away. However, when you see what Hedgeable have achieved the timeline does become questionable. In the demo Hedgeable showed the bot identifying the maximum level of contribution a person could make to an IRA and the sources from which funds can be taken to pay such contribution. It could also present information to consumers to alleviate customer concerns if the market turns downwards. Perhaps the most sophisticated solution they showed was the ability of Katana to use personal financial management aggregation to examine an individual’s monthly expenditure and identify savings they could achieve in order to have money they could invest. It might be tempting to dismiss Kane’s views, but having spent a couple of hours with his Co-founder and brother Mike together with Sid Sharma in London recently looking at their technology stack, Kane deserves to be listened to. Using the experience they have gathered over the last six years involving tens of thousands of web chats and combining them with artificial intelligence the company can understand customer behaviour in ways most advisors and financial institutions can only dream of. They can provide a far better understanding of on-boarding, customer retention and support needs. By understanding how much money people will bring with them companies can improve the targeting of offers relating to what customers want. Equally they can identify the behaviour that might mean a customer might be likely to leave and how much support they will need to keep them happy. This can enable organisations to plan resources for more effectively and where practical take cost out of call centres and other functions. Another hugely impressive presentation came from Brian Lay the CEO of Alpha Rank who created social graphs to help businesses understand the key influencers of their customers. This involves the data that is considered to be the most valuable element of social media services like Facebook Twitter and LinkedIn. Apparently until 2012 Facebook disclosed this information with third parties however it has subsequently been decided to be too valuable to share. Understanding these social graphics can enable businesses to predict when customers might be likely to leave and take preventative action. The same techniques have been used highly successfully in the mobile phone industry with T-Mobile reducing its attrition rates by 50% in a single quarter. In financial services the company will take 2 to 3 years of banking data, analyse it and provide maps back to their clients’ so they can understand who the crucial influencers are who drives behaviour amongst other customers. The service focuses on off-line word of mouth recommendations which account for 93% of such conversations. By definition being off-line these are the hardest to measure but Ley identifies them as the most valuable form of endorsement. The service does not yet currently use social media data but this is seen as a natural further development. One company already making very creative use of social media data Neener Analytics primarily focused on the lending industry and improving their underwriting decisions the service can also be used to improve insurance risk decisions. In each instance services are intended to compliment rather than replace processes. The service is currently built around the data that can be extracted by consumers’ giving permission to access their Facebook, Linkedin and Twitter accounts and can be particularly valuable when trying to assess people who have a poor credit score simply because they have not previously used much credit. One major attraction is that the customer only has to give a single click consent to access this data and the service conducts the rest of the analysis. While the company are prioritising credit and insurance risk talking to founder and CEO Jeff LoCastro I couldn’t help but be drawn to question how much such a service could be used to conduct attitude to risk assessments. This might be particularly useful in areas such as auto enrolment where savers will have had little experience or risk profiling and may find a single click approach more appealing as a process. Current risk profiling techniques do leave much to be desired and are an area where an improved customer experience might be very valuable. Finally I want to give a mention to Horizn who really impressed me with their gamification of training services that can be used with either internal staff or customers to encourage them to learn how to get the best out of new technology services. The platform provides training content with badges and reward points offered to users’ who complete brief online courses on how to use digital services. Failure of staff to engage with and embrace technology training is one of the primary reasons that projects fail to deliver their intended return on investment. Providing reward through this platform could easily become a self funding proposition by increasing the successful adoption of technology. Although initially designed for internal staff one major bank has recently made the service available to 16 million of its customers. I can immediately think of several ways in which this could be used within the life and pensions industry to help staff make more use of technology provided but also to provide valuable additional support to customers. Notably, and I would say very deservedly, both Hedgeable AI and Alpha Rank won prestigious "best in show" awards. Arguably the biggest story from this Finovate event are the changes being made to their future shows. From the September show in New York Finovate is now a four-day event with the initial two days of seventy plus seven minute demos supplemented by two days for detailed meetings and analysis. In addition elements of the shows will now be streamed so that it will be possible to focus on specific areas of interest. Both of these are really worthwhile changes. Having personally attended some 14 Finovate shows around the world I have always found them time well spent but these additional changes will make them even more valuable.
  9. The first day of this year’s Finovate Spring left me thinking I had witnessed a real lesson in how technology can extend financial inclusion to a level many traditional advice firms may consider inconceivable. The west coast Finovate show is always the one where you see the wackiest ideas, but it is also the event that stretches creative thinking the most, making it well worth traveling eight time zones. In one day I witnessed technology that can make profitable lending practical to people who might normally be declined based on all normal credit assessments. Into the bargain I had sight of the sort of service that could replace traditional investment platforms delivering a far more personalised service to consumers at a fraction of the cost in just a few years. To cap it all I saw how services usually reserved for those who can afford to spend $1,000,000 a year or more on their financial advice and private office fees can be accessible to mere high net worth families. Ironically one of the presenters are actually based at Euston Tower on the Euston Road, about two miles from F&TRC’s offices in Islington. AccountScore are a British start-up spun out of Safety Net Credit. Five years ago Safety Net started taking banking data extracted using a Yodlee aggregation feed and enhanced the categorisation of the data to provide detailed insights into the ability of borrowers to meet credit obligations. The service is not intended to replace traditional credit references but to compliment them. It provides a far more personal analysis of the individual’s ability to pay. The new business is now providing this service to other lenders. Their service is designed to enhance underwriting decisions for debt management, high-cost short-term credit, guarantor, and second charge lending as well as traditional first charge mortgage lending. This can include both loans to SMEs as well as private individuals. The key element of Accounts Score’s process is that they take the last 90 days banking data and categorise it in far greater detail than from a standard Yodlee fee. This enables them to clearly identify specific behaviours such as possible loss of income e.g. if the salary has not arrived on a regular date, missed financial transactions and returned direct debits. In addition the company can identify where job seekers allowance or similar benefits are being claimed and even if there is an online gambling habit. This not only enhances new loan underwriting, but can be used as a technique to monitor the financial health of existing customers. It can enable lenders to make offers when they might decline and help them recognise when granting further credit is not in the borrower’s interest. Given the current regulatory focus on forgiveness it can provide crucial insights into borrowers’ on the verge of serious difficulties. AccountScore launched in the UK last September, have opened an office in India and were launching their US operation at Finovate yesterday. Overall their proposition is designed to enhance affordability assessment, improve credit decisions, enable better customer management and account repairment management whilst at the same time identifying vulnerable or distressed consumers where forbearance may be appropriate. It is easy to see how this approach could deliver huge benefits to consumers and lenders as well as addressing an area that the FCA are very focused on currently. Hedg are a really interesting example of what may be the shape of the sort of services that will replace platforms in a few years’ time. Not everyone agrees with me that the UK platform model is terminally broken, but with the real consumer value increasingly being recognised as in financial planning, rather than asset management or product wrappers serious price compression is about to take its toll on each of these elements so it’s the organisations who can help advisors add value to client relationships who will come to the fore. That Hedg provide highly personalised investment solutions for just 25 bps helps demonstrate the further downwards pressure such services will put on platform pricing. Company founder Bob Rutherford is particularly scathing of most robo advisors suggesting they do not provide adequate personalisation and tend to bundle too many clients together by using only a small range of portfolios. The Hedg answer to this has been to build a business which is designed to create opportunities for established financial advisors to identify new, younger clients and deliver ways in which they can interact with those clients at low cost digitally before they are viable for a traditional face to face service. This digital advice service is specifically targeted at traditional advisors who want to reach Generation X and millennials. In their on-boarding process Hedg capture far greater details of personal preferences around investment styles, ethical constraints and other personal tastes designed to support service where advisors can build specific investment structures using the Hedg platform to buy into markets for indices but with specific investment types removed. The advisor firms put content on the Hedg platform outlining their specialist areas of operation and experience giving potential clients the opportunity to select the advisors they feel the greatest affinity for. Advisors pay for putting content on the Hedg platform and a success fee when they attract a client. Hedg are now partnering with US advice software suppliers to reach a wide range of advisors. This a very different approach to the way Unbiased and VouchedFor work in the UK. Not all of the elements of this platform could be easily adapted to the UK regulatory environment nonetheless I find it a very refreshing approach particularly the split economic model where part of the charges are paid by consumers but these are supplemented by payments from advisors looking to attract new clients. Onist Technologies showed how there are still plenty of ways in which the Personal Financial Management concept can be extended demonstrating a multi-disciplinary virtual private office service that can allow a wide range of professional advisors to collaborate to support clients through a virtual private office service where wealth advisors, insurance specialists, tax and legal professionals could all share information and deliver a range of solutions via a single service. Typically this level of integrated advice is usually the preserve of families whose wealth can be measured in many tens of millions. Their service however could be deployed so typical IFA clients might benefit. I could see such an arrangement working really well in towns where a range of local professionals frequently serve the same clients. This provides the client with an enhanced portal service where different members of the family can access information and could be a very effective way for advisors to protect against the loss of assets which so frequently occurs when wealth is transferred across generations. Various studies suggest that between 80% and 95% of children aim too fire their parent’s advisors and there are similar numbers involved when husbands die and wives take over. Onist is available either as a direct to consumer proposition or via professional firms who host the software. To accommodate such firms the company are in the process of building a range of API integrations with more traditional advice software. I see this as a critical success factor. This highlights how APIs can facilitate levels of integration that would have been unthinkable just a few years ago. The services are also targeted at financial institutions who wish to offer a private office type service to clients for whom it would not normally be economically viable to. Although in the UK Personal Financial Management has not been as widely adopted as in the US it's rare to see true innovation in this space. Onist deserve considerable credit for creating an environment that will enable diverse
  1. Load more activity