Back-end system transformation delivers benefit to customer-facing advisers

by Ross Laurie CEO, Visible Capital

“The speed of digital transformation in financial advice is accelerating … investing in technology is now a necessity not a luxury”. These were the key messages of an article in last weeks Financial Times - and a timely one I believe.

If 2020 has taught us anything it is that the most successful businesses have been nimble, pivoting to respond quickly with insight and innovation to a landscape that changed overnight and which continues to resemble shifting sands.

As the FT journalist Jeff Salway observed: “The financial advice sector is sometimes perceived as a laggard when it comes to digitalisation, with an attachment to traditional ways of working. When these methods were disrupted by the pandemic, the industry’s technological capabilities were put to the test.”

He’s right - they were most certainly put to the test. But from our experience working with clients over the last 10 months or so, we have been consistently impressed with the speed at which financial advice firms are embracing new technology with open arms. There aren’t so many laggards out there now and if there are, they simply won’t be around for much longer.

We are finding that the majority of IT departments, CFOs, CEOs and marketing teams are all coming on board the digital revolution, working together to ensure their company has a back end operation capable of driving transformative digital change. For the operation side of the business a backend powerhouse that can digitise processes such as customer onboarding, ensure compliance for regulatory requirements such as MiFD2 and nail cyber security is of paramount importance. CFOs and CEOs have been telling us that they recognise the importance of automating financial processes for reasons of cost and accuracy as well as providing their advisors and customers with real-time financial data that will support decision making and reveal new opportunities to enhance products and services and fuel growth.

But equally for the client-facing advisors and marketing professionals, this new resource of data “gold dust” can be turned into reports or visual dashboards that provide unprecedented access to up-to-the-minute information, which in turn provides solid foundations for identifying areas of product development, helps direct niche marketing and delivers crucial customer insights.  And with all this in place, advisors are also finding that the creation of a friction-free customer experience is freeing up time for all important relationship-building conversations, an area which is likely to form a key part of what differentiates one firm from another in 2021.

In his blog last week Christian talked about new regulation governing product disclosure in relation to their Environmental, Social and Governance (ESG) credentials and how advisors are going to need to understand and accommodate their customers’ investment preferences, based perhaps on their ethics, politics and consciences. This is a good example of how digitisation and rich, real-time customer data combined with good advisor relationship skills is going to be the new way of doing business in 2021.