Top Technologies & Digital Strategies Impacting Finance

Nadine Taffard explains that as technology continues to advance, not all members of the financial community are adopting at the same rate. After visiting the Adviser Innovation Summit and AIIA luncheon with David Whiteing from CBA, she details the key technologies & digital strategies that are both exciting the financial community & concerning them…

Over the last 7 years or so, I have noticed an exponential increase in the pivotal role of technology in the financial services sector. Yet, there are pockets amongst financial advisers (that could be described as “fundamentalists”) who are resisting this technological tsunami.

For example, 59% of advisers who have a website are not updating it regularly and only 5% have added a Live Chat option, even though this is a must, especially to engage with millennials.  Social Media was also reportedly underutilised and only 25% of advisers were currently using Virtual Meetings.

The reality of customer communication in Australia now is that advisers need to be omni channel, this means they need electronic follow ups, correspondence, automation, website traffic monitoring and alerts.

Robo Advice

There has been a lot of talking and writing about Robo Advice, maybe too much; as Matt Heine from Netwealth explained there is a lack of understanding as to what Robo really is and does. Robo is about augmenting, NOT replacing.

Personally, I’ve always looked at it as another distribution channel and “relationship incubator. Robo advice, means having a way to engage with a client in a low friction and low cost manner. Combined with suitable technology to support highly personalised needs analysis, guided selling, amongst others; Robo advice can provide the means to deepen and broaden the relationship with the client over time.

While only 3% of the advisers are using Robo now, as many as 26% are planning to add it to their business model. We are familiar with some aspects of Artificial Intelligence (AI) such as virtual assistants like Siri, Cortana and Alexa; but AI is also known to be very good at investing. Combining constraints, and self learning algorithms and predictors AI is now showing the ability to return 4 times better than human benchmarks.

Virtual Reality

The moonshot discussion of the Adviser Innovation Summit was about Virtual Reality (VR). Wealth management is notoriously linked to uninspiring spreadsheets that offer a poor medium in client engagement to discuss financial aspirations, plans and options. VR however can offer a much more immersive alternative of representing all that data, visualising it and understanding it.

It is predicted that by 2025, 85% of the advisers’ customers will be connected all the time, not just with mobile phones but also via devices such as wearables and other IoT around the home. Financial planning firms are now being compared and measured against the likes of Amazon, Uber and Tesla. People expect a frictionless and uninterrupted experience. For the 21stCentury adviser this is the realisation that it is about Man with machine rather than Man vs. Machine.

Customer-Experience-Centric Business

The undisputable role of technology was also reflected in David Whiteing, Commonwealth Bank’s CIO speech at the AIIA event. The engagement and customer experience has been increasing exponentially to the point that the bank is now an experience centric business. While the core function of financial services institutions are machine to machine transactions; what matters to the businesses are the
1 million conversations per week that occur with their customers.

Another customer driven aspect is the pressure to be at the low end of the cost curve, this means using more open sources and cloud based technology.  David Whiteing went as far as telling the audience that if our plans don’t scare us then they are not bold enough. Velocity is also critical, and improving resilience and reliability of apps with frequent updates is important. Ultimately however, it has to be something the customer wants and use. The biggest challenge can be to make customers aware of those new features.

Ethics & Data

What could be the biggest challenge ahead for financial services is not technological, it’s the ethical approach to data in particular that sourced by wearables and IoT.

As Matt Heine pointed out, underwriting is going to be influenced by genomics and insurance claims will refer to the claimant’s activities recorded on their devices. More and more devices and apps are being developed and consumers are adopting at fantastic rates however, the ethical conversation has not come to a head just yet. The topic is brought up however we are distracted by the next shiney pieces of technology and an ethical standard is yet to be put in stone.

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