A recent and wide-ranging Royal Commission has shone a powerful spotlight onto Australia’s financial services industry. But the themes emerging have application beyond Australia.
The Royal Commission into Misconduct in the Banking, Superannuation & Financial Services Industries, which ran throughout 2018, was prompted by many years of high profile complaints by customers against the conduct of Australia’s financial institutions. The Commission was tasked with reporting on “whether any conduct of financial services entities might have amounted to misconduct.”
The Commissioner’s answer to that was a resounding yes, adding that very often conduct had broken the law - one of the most recited examples being where fees were charged but no service provided.
The Commissioner placed emphasis on the multiple breaches of the law but also highlighted the importance of “the kind of behaviour the community not only expects of financial services entities but is also entitled to expect of them.”
If financial services businesses are to respond to the spirit of the Commission’s report and succeed, they will need to reimagine the role of technology.
While some financial services businesses have been less impacted by the Commission’s spotlight, many are head-down, tail-up - focussed on looking back at what has happened.
Putting things right is not always easy, even when the intention is clear. System mismatches and poor quality data (or lack of data) are creating challenges for financial services businesses that can seem insurmountable.
While Bill Gates famously declared more than twenty years ago that ‘content is king’, many in financial services have reached the conclusion that when it comes to putting things right that, in fact, data is king.
Many in financial services have reached the conclusion that when it comes to putting things right, data is king.
Beyond compliance
Many in Australian financial services are carefully balancing the need to remediate and plan for the future.
For any financial services business planning for the future, regardless of what country they are in, the risk is that the outputs of financial advice remain unchanged and defined by legal definition: a document, a product or the number of meetings offered and provided.
These outputs may be evidence of something, but they’re unlikely to meet a client’s expectation of value.
That’s where technology has a greater role to play.
While regtech software is being used by some to speed up remediation, we are also seeing those in financial services increasingly use the same technology to proactively monitor multiple and large data sets. This is allowing a near real-time ability to monitor delivery of advice services and stop payments before they are made where data doesn’t support this.
The monitoring of services promised and services delivered will evolve over time to include many more data points that demonstrate value - such as how many times a client has logged into an adviser’s client portal, what they used and how long they spent there.
New tech, old process
Overall, financial services businesses will meet legislative and business requirements through better using the technology capabilities they already have, and aligning business processes.
That said, new technology investment will be attractive where it can drive either efficiency, new revenue or both.
Whether it’s for robo or scaled advice or broad-based automation, new technology can fail to deliver on goals where existing processes and documents are simply retrofitted to the new technology. The result is, well, not enough.
A proposition that delivers a large set of compliance pages for a customer who paid for a specific transactional advice need defeats the purpose for everyone. Scaled advice that ends with the customer needing to print, sign and email a form back results in friction all round.
Demonstrating value will be difficult where value remains defined only by the delivery of documents, products and statements.
Alexa, how is my portfolio doing?
Of course, the value of advice is not just in the advice artefact or product itself.
Whether an adviser’s interaction with their client is in writing, digital, via a voice service or other methods to be invented, the ease of access to advice will shape the perception of value.
But demonstrating value will be difficult where value remains defined only by the delivery of documents, products and statements.
