2016 was undoubtedly a year of considerable excitement and innovation around financial technology solutions.
It was a remarkable year – especially for someone like me from a financial technology firm, sitting in the middle of it all.
We saw some great examples of financial advisory and wealth management firms implementing state-of-the-art technology bringing together tired old legacy systems, streamlining processes, creating synergies across traditional and digital channels.
This resulted in improved margins and – perhaps most importantly - connecting and unleashing the power of once dormant data. Connecting data is so important to get right. Established businesses are sitting on a mine of valuable information.
Once data is properly connected, businesses can start work on meaningful segmentation of the customer base, enabling them to communicate more effectively and efficiently and build appropriate advice and service models relevant for different cohorts.
It was encouraging to see the new open and collaborative approach from the FCA that encourages further technology innovation in the financial services market.We also saw some firms really getting to grips with integrating technology to future-proof their businesses – and that is a really positive thing.
However we remain concerned there are many others out there across the financial services market that have not yet started the process of upgrading their technology. Hopefully 2017 will be the year that more firms focus on their technology requirements.
We also witnessed further innovation in the so called ‘robo-advice’ world around the automation of digital advice processes. While still up for debate how robust some of the start-up models are, and how many are here to stay, this new breed of low cost online investment proposition brings a heightened focus to delivering a digital experience for retail investors.
Some businesses would do well to learn that, rather than representing a threat, there are elements of the ‘robo-advice’ model that can actually support and enhance traditional advice and wealth management propositions.
It is not a case of implementing ‘robo-advice’ wholesale but more looking at what can be achieved by carefully selecting elements – through a modular approach – that supports their own business model and client segments.
This is all about offering more customer choice and flexibility – harnessing the power of technology to ensure you are capable of delivering your proposition via the channel your customers want - whether that be face-to-face, purely online, or a combination of both.
Embedding the right technology – through one platform – enables financial services firms to focus more on growth, profitability and service – free from the distractions of disjointed systems, processes and changing regulation.
And on the subject of regulation, it was encouraging to see the new open and collaborative approach from the FCA that encourages further technology innovation in the financial services market.
The first cohort of firms to test their products in the regulatory sandbox was recently announced and it is gratifying to see innovation and technology development reach the market. The financial services industry has been transformed by the technology revolution.
Automation, data innovation and other technological efficiencies can also benefit financial services firms’ efforts to comply with a growing regulatory burden and improve their governance controls.
We are living through exciting times with many challenges but many more opportunities in the market.
Getting your technology house in order will determine whether this new year is a year of distraction or development.
Andrew Foster is executive general manager, private wealth, for Iress
