Financial advice: the digital turn
Growing digitization makes financial services accessible to an ever broader audience. The digitization trend produces new entrants and means that the present providers have to continue seeking new earnings models. Robo advice acts as an important catalyst in this trend. The next step in robo advice is to automate more financial services for the client, while at the same time making quality improvements.
Ronald Janssen, Managing Director Private Client Solutions at Ortec Finance, sees some profound changes taking place in the financial services community over the next few years: “Banks started with digitizing checking accounts, followed by savings accounts, and investment and insurance products will be next. You will see more robo platforms where you can close on and manage investment solutions online. Mobile traffic has been greater than web traffic for a while now, but the complexity of investment products is one important reason why propositions via internet are relatively strong when compared with mobile apps.”
“At the moment, robo advice is mainly used to bring products to the client,” Janssen states. “What happens far too little is looking at what is needed from the perspective of the client, and what the best decisions are related to his (or her) wealth. We can help parties work client-centered; and make the transition from investment advice to financial advice.”
This applies in particular to online investment platforms. Janssen believes Ortec Finance can play an important role in creating sound investment solutions that focus on the goals of the client. “At present, the client is asked a few questions, primarily to determine his risk appetite. But you can dig deeper as well. If I want to realize a specific goal, should I invest defensively, neutrally or offensively? What is the probability of reaching the goal? Can I make withdrawals from the portfolio? Our approach helps you calculate the feasibility of the goals and measure the capacity for loss. We can make quality improvements to the advisory process and the investment information available. It is furthermore important to continue monitoring the goals. At moments when things do not go as planned, we can bring this to the attention of the client immediately and offer solutions to address this. We are simply further along than our competitors on this.”
Mobile customer experienceThe great opportunities for the next generation online platforms lay in the possibility to not only assist the consumer during the initial investment, but also inform and guide him (or her) for the entire duration of an investment product. This is possible with the help of mobile apps for example.
With the support of a mobile app the client has not only online insight in market developments or the value of the portfolio, but also in their impact on his (or her) personal financial ambitions. This insight gives the client greater control over his (or her) decisions and, as a result, improves the customer experience.
"Five years from now we all have a client portal that shows us our financial status in detail.”
More control for clients“Banks learn more about their various client segments by using big data,” according to Janssen. “Based on this they can automate their advice and still offer customized services to their clients and help them stay financially healthy. With PSD II an important step has been taken towards the efficient unlocking of client data. Five years from now we all have a client portal that shows us our financial status in detail. Then we will receive proactive signals if we must take action.”
At the moment clients have often only one goal and one account per provider. Janssen believes this will change. “We will go to a situation in which a provider manages multiple money jars for the different goals of a client. Banks are trying this already, but the processes are still too complex. With online financial advice the basic principles will be simplicity, user-friendliness and relevance.”