Data is set to be one of the biggest drivers of evolution within financial services.
The amount of information being collected across the value chain is huge, and the firms that recognise and use this data have the ability to bring about better client outcomes.
However, many firms have been slow at using the data they have in front of them. This has been evident in the platform market in particular, as many businesses are preoccupied with the onerous task of replatforming and coping with the fallout this has created.
Indeed, technology has yet to truly re-engineer financial services. It has just allowed the same products to be sold in a slightly different way.
Platforms may have the most to gain from the data revolution.
Fund groups now only receive data direct from platforms, seeing only how much money has been placed in a fund via specific platforms. They cannot identify clients, their objectives or buying patterns and, put simply, they don’t have access to the data that matters.
Innovation is a term bandied about regularly, but platforms were the last piece of true technology innovation we have seen.The data revolution could therefore represent a ‘Netflix moment’ for platforms.
When Netflix started out, it hosted third-party content from all the major production companies and film studios.
Over time, however, it studied customers’ viewing behaviours and patterns, finding out what films or shows worked at particular times of the year (and later, what time of day), how they consumed their media, how they reacted to new releases and what genres were most popular among different demographics, among other things.
It was soon able to build a picture of what its audience looked like and how it responded. As a result, Netflix began to create its own original content and now some of the best loved shows have emerged from this model.
Similar to the way Netflix uses its algorithms to help create content, platforms have the opportunity to use data in the same way.
By analysing how investors behave after particular events and what their buying patterns are, they have the ability to respond to customer needs and demands.
The balance of power in this regard has shifted and it would not be surprising to see platforms leverage this kind of data to create model portfolios - or even their own funds - to better serve client needs.
This creates a great opportunity for platforms to partner with fund groups and leverage the investment expertise they bring, with the power of data and technology that’s held with platforms.
This would be very different from how things have been done in the past and we should expect to see deeper relationships between fund groups and platforms in the future.
Platforms can make the most of this shift by making sure they are capturing the sorts of data that would interest providers, such as asset flows and underlying trends.
What this will hopefully result in is a ‘Netflix-esque’, client-centric form of asset management.
Innovation is a term bandied about regularly, but platforms were the last piece of true technology innovation we have seen.
Financial services has, for too long, been a conservative industry.
The mass of data available to platforms now means there is an opportunity to change the status quo.
Barry Neilson is chief customer officer at Nucleus
