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Open banking is set to ruffle a few feathers

• It could be a way for advisers to build more frequent communication with the customer.

• Large networks can work with account information service providers to integrate information into their own software.

Niral Parekh, head of retail asset and wealth management at tech consultancy Capco, says: “Rather than being product sellers, advisers can become even more advice focused.”

Mr McKenna and Mr Parekh pointed to firms like SJP that would benefit greatly from open banking because of the size of their adviser and client pool.

On the flipside, the experts say that if IFAs do not take advantage of open banking they risk being disintermediated.

This is because open banking can still provide greater opportunities for banks to regularly contact their customers and cross-sell them, or try to develop financial planning services.

Boosting customer engagement

Mr McKenna says: “Advisers may choose to say that banks never do financial advice well, but these apps, when they work well, the level of customer engagement they get is high.

“One bank found that when they rolled out personal financial management tools to their best high net worth customers, the customers went from accessing their online banking information two or three times a month to every other day, which is a very significant increase in contact.

“Open banking is a way for the advisers  to build more frequent communication with the customer. The contra to that is if the advisers don’t, the banks will. The banks are going to use open banking as a big bridge into the financial advice market. 

“Some advisers might say, ‘Banks do not do financial advice very well,’ but why put yourself at risk? Why not offer a similar or indeed a better service?”  

Amira Brakenhielm Hilmy, management consultant at Capco, says: “It could go a multiple of ways. It could exclude them, but given the amount that is going into various tech solutions I think the advisers will have a different avenue to be able to use technology to interact with their clients.”

Those different avenues could be in the form of using software houses or adviser networks.

Gemma Harle, managing director of the mortgage arm at Intrinsic, says open banking is still in its early days, so in general there is a lack of understanding as to what it is. Additionally, both advisers and consumers are still getting to grips with the impact of open banking and the risks and opportunities it brings.

But she adds that large networks, such as Intrinsic, can work with mortgage providers and AISPs to integrate information into their own software.

She says: “For instance, Intrinsic is looking at how Xplan, our technology platform, can be adapted to help advisers be as efficient as possible.