By the knockout stages of the World Cup, it’s customary for Germany’s football team to be crushing all before them, and for England’s players to be ruing yet another premature exit.
So this year’s role reversal in Russia was as miraculous as it was unexpected, and many England fans have been savouring the schadenfreude.
There is an England-Germany role reversal going on in financial services too, but here it is the UK that is the laggard – and the Germans who may have the last laugh.
At the heart of the trend is Germany’s network of Sparkassen. Though technically they are public savings banks, Sparkassen are the closest thing Germany has to IFAs.
Most German towns will have a Sparkasse or two, and staff typically advise on a range of investment products and have a surprisingly high degree of autonomy in what they offer clients.
Many are using that autonomy to explore new technology, and recent years have seen an explosion in partnerships between Sparkassen and Germany’s growing crop of fintech players.
For example, the 1,100-branch Volksbanken chain is introducing its clients to the crowdfunding platform Startnext, and using the facial recognition app IDnow to verify clients’ identity.
For the Sparkassen themselves, using such technology streamlines both back-office functions such as client onboarding and portfolio transfers, and middle office functions like compliance and investment suitability checks.
Meanwhile, the technology is giving clients more control over – and better visibility of – their investments, and reducing costs. For the famously thrifty Germans, such advances are proving hugely popular.
By comparison, some British advisers remain wary of embracing start-up technology.
Such reticence cannot be blamed on a lack of choice; the UK’s fintech sector is every bit as innovative – and considerably more established – as Germany’s.
Neither can it be dismissed as a product of an overly tight regulatory environment. The FCA’s support of financial innovation is one of the reasons Britain’s fintech sector became a world leader; and the UK regulator is positively laissez-faire in comparison with BaFin, its German counterpart.
In fact, many forward-thinking Sparkassen are looking less to the UK for inspiration and more to the US – where share ownership is much higher and fierce competition has prompted advisers to embrace technology to give themselves an edge.
Britain’s fintech industry rightly enjoys a world-class reputation. But it is not enough for it just to develop great ideas; for it to deliver on its potential, the broader financial services community needs to become more receptive to innovation.
Many financial advisers now face an existential threat from robo-advisers, and technology offers them an unprecedented chance to fight back.
Britain’s financial services industry should be wary of complacency, and for once our advisers can learn from the Germans. Albeit about client service rather than football.
Ola Abdul is founder and chief executive of Fundment
