The lines between financial services and technology firms have blurred to the point that previously distinct sectors are colliding. Financial services companies are using technology to sharpen operational efficiency, lower costs, improve customer experience and heighten the appeal of their products and services. Investment managers, Independent Financial Advisers (IFAs) and bankers have started deploying fully customised robo-advice or computer-automated investment platform processes. The question is no longer whether fintech (financial technology) will transform financial services, but which firms will apply it expeditiously and emerge as leaders. According to Charles Darwin it is not the strongest of the species that survive, nor the most intelligent, but the ones most responsive to change. Each year the fintech drum beats louder and it is time for the financial services industry to adapt and thrive, or be left behind.
What does Fintech mean for Advisers?
Most millennials say they would take financial advice from Facebook, Amazon or Google if given the opportunity to do so, according to the February 2017 Tiburon CEO Summit XXXI Content survey. This is just one reason why advisers need to continue to grow their trusted relationships. After all, we know that trust and communication are huge factors in why investors select or leave an adviser. Below are some of the benefits to Advisers of using technology in their practices:
Not all clients have time to come into the office. Clients who are still working usually expect interactions with their adviser to be efficient and direct. They also expect to be able to review information on their own at any time and use digital tools that allow them to check in with their adviser whenever they deem necessary. Technology can also provide an optimal level of transparency and allows for the processes in the adviser hub to be carried out much quicker when compared to the old ways of doing things where advisers had to deal with significant amounts of paperwork.
- Engaging Clients
Fintech can make the client experience effective and engaging; it presents excellent opportunities to interact and engage with clients; it leverages the power of technology to more fully include the client in the planning process and it enables financial planners to spend more time with clients in a meaningful way. Advisers need to ensure they are communicating with clients in new, different and innovative ways.
Fintech provides clients access to their own information, allowing clients to track the progress of their financial plans in real-time, through user-friendly applications. Fintech promotes a more collaborative type of financial planning engagement - being client driven rather than adviser-driven. Financial planners are also open to clients taking a "do-it yourself" approach to manage some aspects of their investments and wealth.
What does Fintech mean for Clients?
According to a McKinsey & Company report from June 2015, 72% of investors under the age of 40 said they would be comfortable working with a virtual financial adviser. It is clear that investors expect digital tools as part of their relationship with their financial adviser. Investors enjoy digital tools in other parts of their lives so why shouldn't they when it comes to managing their wealth? If delivered well, clients may benefit in many ways from fintech. The following are some of the benefits to clients for fintech solutions:
- Digital experience and transparency
Clients have the digital experience. This means that they are able to keep in touch with their adviser at the snap of their fingers. It makes them feel closer to their adviser and builds a sense of trust. There is also a high level of transparency as they will able to stay in touch with their investments and monitor the growth of their portfolio.
- Cheaper financial Advice
New competition is driving costs down and digital tools are removing overhead and certain manual processes for advisers - thereby cutting down their costs and in turn reducing the fees they charge to clients.
- Extending reachability
Companies are also concentrating on extending the reach of their services to global markets. With the rise in competition pressure and economic recession, companies have to come up with new strategies to reach a bigger audience. Technology enables them to manage their resources and use different channels of communication to attract more customers. The key to achieving a broader reach on a global scale is to centralise the platform and communication tools they are using via a hybrid approach. Widespread communication can be achieved with the use of technological tools that enable companies to engage with customers wherever they are regardless of their different time horizons. Technological improvements now allow financial service providers to capture business leads and attract new customers to their business using automated or semi-automated digital sales journeys.
At Beanstalk Online Investments our main aim is to ensure that investing is as painless as possible to encourage a savings culture in South Africa. Beanstalk leads the industry in the digital space of financial advice - having been the first IFA to use electronic signatures, a paperless on-boarding process and true automated advice. Through Fintech tools from our sister company Wealthcraft (Pty) Ltd, we are able to reach a wider audience when it comes to our clients. This has also helped us to cut costs and, as a result, our clients are charged minimal fees giving us a competitive advantage in the market; whilst not compromising the quality of the advice we give. For us, no investment is too small and we are willing to go the extra mile to ensure all our clients receive the same advice and try to ensure we meet everyone at their different points on their journey to financial wellness and freedom.
If you need assistance with your finances, do not hesitate to contact us