IFAs with robust data assets are more valuable
By Richard Braidwood, Chief Operating Officer, Visible Capital
Last year, the European Commission estimated that by 2020, the value of personalised data would be one trillion euros, almost 8% of the EU’s GDP. And in a paper by PWC, Putting a value on data, its authors suggest that, in a world where 2.5 quintillion bytes of data are being produced every day, it’s important for organisations to understand the nature of the data it has and how best it can be applied and monetised.
I couldn’t agree more. And I have been encouraged in recent months by the number of our IFA clients who are recognising how Visible Capital’s customer onboarding technology is not only a current efficiency and security solution for their businesses, but that it’s also building robust data sets for future growth and profit advantages.
For example, in a market where we are seeing significant movement in the buying and selling of IFA businesses, companies who have strong data assets and technology propositions are quite simply going to be more valuable. And from what I am seeing in the market just now, these are not insignificant margins. 87% of IFA acquisition deals are done based on recurring income (RI). In 2019, 3.5 times RI was the norm but for companies who have invested in financial technology and, in particular, in data insights technologies, not only will they have secured better results for their clients and driven higher income revenues, they will have added considerable value to their side of any acquisition deal.
Visible Capital’s onboarding technology, is in its very essence, a tech overlay. By collecting IFA customers’ data and categorising it by sophisticated machine-learning technology, IFAs using our technology are constantly building data assets which can be analysed right across the customer base to produce forensic insights and shape strategy.
We are talking to a number of CEOs of IFAs who have been quick to recognise that IFAs are becoming data businesses and that, even if they are not maximising their data proposition at the moment, they know that by having Visible Capital’s technology underpinning their customer accounts, they are future proofing themselves for potential sales or acquisition activity, perhaps 12 months down the line.
We may still be living in uncertain times, but the feisty IFA market is forging forward, showing a very high growth curve in the area of the adoption of technology. And when that technology can not only deliver on the immediate advantages of automated onboarding, but also deliver a secondary value of robust asset strength, we’re delighted that CEOs are seeing the big picture and that they are just as excited as we are.