Bob Dylan’s song, ‘The Times, They Are A-Changin’, could not be more apt in describing the disruptive influence technology has had on the financial industry.
A recent report by the British Bankers’ Association revealed that high street bank branches saw a 32 per cent decline in visits between 2011 and 2015 as consumers turn to online alternatives.
Members of the public are comfortable managing their financial affairs over the web with the number of payments made using banking apps rising by 54 per cent in 2015 to £347m, while internet banking was used for 417m payments – a year-on-year rise of 2 per cent.
These figures bode well for innovative software engineers as well as Fintech start-ups aiming to create waves with their digital propositions.
Dennis Hall, chief executive of London-based Yellowtail Financial Planning, said: “Technology continues to evolve and so does the way we take in information. People are getting used to managing their finances online.
“Once upon the time, people could walk to their local high street, pop into a financial advisory practice and get advice on life assurance, for example. This is no longer the case. Many advisers now promote their business online.”
Many people in the industry still get excited about the advent of online investment management sites based on algorithms that originally served the traditional advisory community.
This is because many see the potential of using these so-called ‘robo-advisers’ to service less-affluent individuals who have fallen into the advice gap as an unintended consequence of the RDR – and still make a profit.
While fully fledged robo-advice services are few and far between in the UK, there has been a proliferation in hybrid services that combine the automated investment process with the input of a living and breathing adviser.
Here, the intermediary would typically conduct the less-complex and time-consuming areas of financial planning, such as periodic financial reviews.
Under this model, which the industry has been quick to label ‘cyborg’ advice, the adviser is virtual – meaning correspondence between the intermediary and the client is conducted digitally.
Jeannie Boyle, technical director at EQ Investors, said: “People like to conduct their business online but they want to know there are quality individuals behind the process.”
In November last year the boutique wealth manager headed by John Spiers, founder of financial services group Bestinvest, launched a digital proposition to sit alongside its traditional advisory and bespoke discretionary investment management services.
Known as Simply EQ, it is designed for people who fall under the mass-affluent banner, as well as high-net-worth clients with simple investment needs who do not want to be hit by an inflated levy charged by traditional advisory practices.
It allows clients to invest through Isas, junior Isas, general investment accounts and a self-invested personal pension. Fees start from 98p per month, based on an investment of £1,000 in the EQ Low Cost portfolios, and this figure includes fund charges and VAT.