The delicate balance between digital and retail

The 2016 Digital Banking Report “State of the Digital Customer Journey” is a daunting 75 page tome. But it contains findings that are as startling as it is relevant.

Take this statistic for instance: The vast majority of financial institutions can’t open a new account entirely online or on a mobile device.

Just consider the ramifications of that fact for a moment. The one notable exception to that finding is Tangerine, which has built an entire business plan centred on mobile phone functionality. But for the vast number of banks and financial advising firms, customers still need to go in person to open a bank account or complete the onboarding process with an advisor.

So at a time when downtown real estate is shrinking while getting more expensive, and as customers are increasingly turning to mobile apps and websites to manage more and more aspects of their lives, the financial sector is growing further and further out of touch.

The fixed way of doing things needs to end, and financial institutions need to start viewing technology as a facilitator for change rather than an insignificant accoutrement.

The new BMO building in downtown Toronto is a good example of a bank revamping its retail experience to reflect the changing ways in which people conduct their business. It was revamped in 2014 to streamline their marketing department from several offices into one new 29,000 square-foot facility located on the 7th floor of the Manulife Centre’s north tower at 55 Bloor Street West.

The new design makes use of alternative workspace strategies to help create a collaborative, open environment that promotes interaction and information sharing. Special attention was placed on integrating both technology and graphics to promote BMO’s brand and corporate image within the workplace.

Improving the retail space is one part of the equation. Creating a physical space that encourages fluid interactions and eases workflow allows face-to-face meetings to be more productive. But imagine just how much more productive and meaningful such exchanges would be if less customers needed to go to their financial institution in person on a regular basis. Moving routine procedures like opening a new account online or to a mobile phone would allow for more meaningful communication and strengthened customer relationships.

It’s a delicate balance, and those personalized interactions are still necessary to maintain strong relationships. Moving everything online or trying to completely replace human interaction with the use of chatbots is moving too far in the other direction. Replacing the human with technology is also sure to isolate customers. After all, websites are only one-way communication, from the financial institution to the client. And chatbots are only useful for initial engagement. But finding the right balance, by embracing technology as a facilitator to improve on in-person interactions and reduce amount of time to service, will keep a financial institution competitive in today’s fast-changing market.

The future of advisor platforms

In this final post examining the Capgemini study “Improving Financial Advisor Productivity through Automation”, we’ll take a look at the conclusion of the study, and what they advise the next generation of advisor platforms need to look like.

A next generation advisor platform, in order to keep up with the fast-paced changes sweeping the financial sector, the key functionalities a next generation advisor platform will have are:

Real-Time Updates ensures the making of informed decisions both by advisors and clients. They help in portfolio adjustments with real-time data feeds.

Streamlined Business Processes help advisors / firms operate efficiently to keep the costs low, and provide better transparency and a seamless client experience.

Multi-Product, Multi-Asset Class Capability is critical for processing various classes of investments across client segments.

Flexible and Agile Platforms allow firms / advisors to add business services as required. Technology components can also be upgraded with improved functionality more easily with a Services Oriented Architecture (SOA).

Compliance and Risk Management for the wealth management firm and the client to meet regulatory requirements and manage credit, market, and operational exposures to events that can negatively impact portfolios and profitabilit.

Scalability to support increases in levels of business volume into other market segments and geographies without a corresponding increase in the firm’s cost base.

The next generation platform aims to provide easier, faster and centralized access to all relevant tools and information. Next generation platforms support the advisory process through strong integrated workflows and leading edge applications. Key components of the new platform across the advisory value chain are as follows:

Prospecting & Relationship Management: Integrated a lead and contact management system to allow efficient prospecting / relationship management. –Efficient alert mechanism for advisors to track leads

–Access to all historic and current client data which helps in better understanding client needs / goals

–Reports on advisor productivity with up-to-date analysis of leads and their usage

–Supports client segmentation and customer analytics to identify opportunities

Investment Planning: The financial planning system is centralized and comprehensive with records for all client information.

–Enables a complete view of client history, financial goals, and assets

–Comprehensive risk management / scenario analysis tool which runs various scenarios for exhaustive client risk assessment

–KYC tool is integrated to capture all relevant client data for compliance purposes

–Compliance checks are initiated even before a financial plan is prepared

–Alerts / triggers based on life and liquidity events of clients

Client On-Boarding: Unified account opening tool which selects and pre-fills the existing client information (information entered in one tool reflects across tools / systems). Financial planning and portfolio management tools are integrated together.

–Provides streamlined account opening and paperless processing

–Facilitates step-wise approach to financial planning, automatically prepopulating the planning tool with data that exists in the client profile database

–Financial planning output is directed into the portfolio management tools

Servicing & Monitoring:

–A holistic 360° view of the client’s financial assets

–Helps in integrating a team-based service delivery model along with the traditional relationship based advisory

–Alerts and notifications that provide real-time messages driven by deviation from desired returns

–Customized views of client holdings, account information, service requests, and financial analytics

–Automated routine financial monitoring per defined benchmarks

Centralized Client Reporting & Alert Interface: The new platforms will be able to generate a wide range of custom reports without the advisor having to go to different applications (from the simple account balance / net worth to a complicated attribution analysis).

–Consolidated reports with data across all accounts and group of accounts (total assets with the firm, total equity holdings across all accounts)

–Reports with a consistent and professional look and feel

–Alert / Early warning system to proactively identify and address issues

The key to a good advisor workstation is the integration of data and a well orchestrated set of technology components. In addition to providing new and advanced features, the new platform should have a well-defined information architecture which promotes a greater adoption and usage.

How Blockchain and distributed ledger technologies are impacting banking

Going from an underground cult-like technology for dispersing bitcoins, blockchain has now moved from out of the shadow of currency exchange to mainstream banking.

Blockchain has become the new cure-all to your third-party information retrieval hangover! The shared ledger technology that allows any participant in a business network to see the system of record, records and stores every transaction that occurs in the network, creating an irrevocable and auditable transaction history.

Blockchain is set to have a transformative impact on a number of industries, including financial services. The technology may still be in its infancy, but already we are seeing initiatives underway that hope to put forward blockchain as an industry-leading solution that will offer important benefits in the context of the transfer of assets within business networks.

As with any new and promising technology, it’s important to note the limitations of putting it on a pedestal too soon. While expert opinion varies about exactly how, when, and at what speed blockchain technologies will disrupt the financial services industry, it is generally agreed upon that it will bring about noticeable changes to the efficiency of the industry.

Current state of the industry:

Currently, participants in business networks each maintain their own traditional ledgers to record transactions between them within their ecosystem. This typically means a lot of file sharing and swapping data. What banks today are doing are essentially running databases and recording claims against them. With thousands of banks in the world, all maintaining similar but separate databases, that makes for a lot unnecessary expenses.

Potential for the future:

But blockchain has the potential to provide a common, ubiquitous ledger technology, reducing the friction caused when intermediaries use different technology infrastructures. Having a universal ledger system used by many institutions would help drive down cost and create more open access.

Put another way, the initial introduction of blockchain will bring efficiency in the short-term, and has the potential to completely rewrite the underlying infrastructure over time, more easily connecting counterparties in innovative network configurations rather than the more centralised models we’re seeing today.

Solutions for problems in the present:

Grandiose dreams aside, for now it is essential to apply blockchain where there is a genuine problem to solve. One of the most frequently used examples are transactions that are rooted in the physical world; where there is plenty of paper (which we can easily imagine being digitalised), and where a number of parties have to do a similar action but in sequence to enable a transaction to be processed. Client onboarding is a great example of this.