InvestTech 2023 - A faster, smarter future

By Jayson Forrest

Technology will continue to play a significant role in reshaping the advice landscape in the years ahead. Andrew Inwood (CoreData), Eric Rocks (SS&C), and Samantha Hawkins (Praemium) share their insights on some of the trends in technology that will impact advice.

Looking towards the next 20 years, there are numerous themes developing that will not only influence the evolution of technology, but will also significantly reshape the financial services industry.

Three of these themes identified by CoreData are:

1. Longevity;

2. The hydrogen/solar partnership; and

3. The rise of homo silica.

“These are some of the themes that are going to transform society and will have a profound impact on the development of technology going forward,” says Andrew Inwood - Founder and Principal of CoreData. Speaking at the IMAP 2023 Virtual InvestTech conference, Andrew says advancements in medical technologies will mean that most cancers, as well as degenerative issues associated with the heart, will be solvable.

“The generation has already been born that will live well beyond what we think is a normal lifespan. Developments in medical technologies will see us living longer, but that doesn’t come without its challenges. Longevity risk and the ability to fund a longer life is fundamentally going to affect how we invest and what we invest in,” he says.

Underpinning the second theme - the hydrogen/solar partnership - is the expectation that renewables will not completely replace fossil fuels. Instead, a hydrogen/solar partnership is more likely, where existing types of energy and solar are used to split hydrogen out of available sources. 

“Hydrogen is a great fuel that you can make water and oxygen out of when you burn it, which isn’t a bad outcome,” says Andrew. “However, it’s expensive to make, so using solar to produce it does make it more cost-effective. Many manufacturing industries around the world are waiting for hydrogen to come online, and that’s already starting to happen with the first hydrogen powered cars being produced.”

The third theme - The rise of homo silica - is shaping up as a critical theme for the financial services industry. The relationship between humans and computers (artificial intelligence and machine learning) is accelerating rapidly. Already, there are many successful companies working on a brain/computer interface, and while that currently involves working mostly on the control of hands, limbs, valves, and hearts, the technology isn’t far away from decision-making.

“These three themes will help shape the next 20 years,” says Andrew. “The common denominator with all of them is technology, which will fundamentally change the way in which people interact with the financial services industry.

“Our energy needs will be replaced with hydrogen, which will drive economic growth. People living longer will create opportunities but also challenges, particularly with how they fund a longer lifestyle, and the way in which people make decisions will be changed by the rise of homo silica, as we’re already seeing with ChatGPT and GPT-3.”

Eric Rocks - Vice President and Managing Director at SS&C - believes the continual implementation of AI and technology into the advice process will not only improve the management of data, but it will also enhance the user experience.

He says a benefit of evolving technology has been the emergence of self-service advice models, where the likes of smartphone apps are changing the way Australians consume their financial advice and investment services.

“Technology is changing the concept of ‘who can do what’ - from an institution to the customer. It’s also changing the servicing needs of the adviser from the back-office to self-service.”

According to Eric, this hybrid model that uses tech tools as an extension of the human adviser, not only improves scale and business efficiency, it also reduces overheads on critical functions, creates timely access to information and intellectual assets, and allows for immediate access to information.

“The smart use of technology can provide advisers with a more efficient and enhanced user experience, while providing an overall better service to your clients.”

It’s a view supported by Samantha Hawkins - Head of Sales, South at Praemium - who says the adoption of smart technology, like smartphone apps, has been one of the biggest drivers of changing consumer behaviour over the last decade.

She points to industry research that shows that 40 per cent of consumers today prefer self-service over human contact, and 50 per cent of clients believe their adviser should offer a digital solution.

Eric agrees, adding that machine learning, natural language processing, chat bots and alternative interfaces, mobile and digital apps, predictive analytics, and business process management, are all key pieces in improving the digital advice offering.

“It’s about using technology that will learn and get smarter as you use it more. Machine learning takes those repetitive tasks you do within the business, like client onboarding, learns what you’re doing and then ‘smart systems’ will do these tasks automatically for you.”

He adds that the increasing use of Robotic Process Automation (RPA) is gradually removing a lot of the repetitiveness and manual effort from the operations side of an advice business. RPA is a software-based technology utilising software robots to emulate human execution of a business process. This means that it performs the task on a computer, uses the same interface a human worker would, clicks, types, opens applications and uses keyboard shortcuts.

RPA can speed up the process of adding data into platforms, onboarding clients, and delivering advice to clients. It is enabling advisers to spend more time with their clients, rather than being bogged down with back-office administrative work.

Eric says advisers need to change their mindset with how they interact with information and technology.

“Natural language processing is more than chat bots,” he says. “It allows you to ask your platform, for example, what your investment exposure is to a particular country. Your platform should be able to tell you exactly what your exposure is and interpret what your next question will be. It provides an intuitive experience.”

Another trend Eric is seeing is the rise of predictive analytics. Predictive analytics encompasses a variety of statistical techniques from data mining, predictive modelling, and machine learning, that analyses current and historical facts to make predictions about future or otherwise unknown events.

“Predictive analytics takes all the information you have in your system and uses that to improve outcomes for your clients. For example, it does this by comparing previous market scenarios, like market corrections, and recommends portfolio adjustments for particular clients.”  

A definite trend Samantha is seeing is the desire by consumers to have a more simplified wealth experience, with a single view of their wealth.

She cites industry research which shows that 44 per cent of investors state the number one reason they are dissatisfied with their service is due to not seeing all their investments in the one place, and 60 per cent of emerging affluent investors would welcome the ability to access and manage their whole investment portfolio through a single digital experience.

“Many platforms are trying to build the functionality to be able to bring all of the client’s wealth into one account,” says Samantha.

According to Samantha, platform integration will be the future of investment platforms. This will enable clients the ability to access a full suite of investment solutions, cost-effectively on a single platform, while allowing for a holistic wealth management service.

“We’re heading towards the complete outsourcing of administration services, which will allow advisers to focus more on the actual provision of advice, while integrated technology solutions with data feeds from various providers will create a single source of data.”

It’s a view that Eric supports. From his global observations, he is seeing the emergence of the ‘one account’ concept, which combines a client’s investments, banking, and insurances all into a single investment account, as part of an advice solution.

“We’re seeing a lot more complicated programs that are harder to run from a technology provider’s perspective, but which are much better for the client in terms of the capabilities that it provides,” says Eric. “By gathering together data sitting in different spots along the advice chain into the one account, it will not only provide easy access and management, but will simplify the wealth experience for consumers.”

According to Samantha, the digital evolution has driven an expectation by consumers for an increasingly personalised service. This is supported by research from Accenture, which shows that 34 per cent of people would increase their investments if they received a hyper-personalised experience, and 55 per cent reporting they feel the advice they receive is too generic.

“Research shows that engagement and communication with clients must be meaningful and tailored for the client to feel that you understand and value them. This is vital for building a trusted relationship,” says Samantha. “Technology is stepping in to enable advisers to personalise the advice experience for clients, particularly in respect to their needs and investments.”

However, while personalised advice and digital service are valued by clients, they still want authentic communication from their adviser. And that’s where ‘digital empathy’ kicks in.

According to Samantha, digital empathy is about building digital experiences that respond to the feelings and emotions of the user through digital engagement and insights. She says technology is increasingly leveraging data to deliver digital empathy. 

Praemium supports digital empathy by using AI and machine learning-based insights on its platform, which are designed to identify patterns of client behaviour that could indicate a need for additional advice or guidance.

“Over many years, we have been tracking client behaviours and can identify certain behaviours. This enables us to flag particular client behaviours with advisers to let them know that there may be cause for concern, prompting them to contact their clients,” she says.

As an example, Praemium tracks the interaction a client has with their portal. If it sees a person logging in more frequently and at irregular hours, or if their behaviour mimics that of other clients who have closed their accounts, then Praemium will alert the adviser via their dashboard about the client’s behaviour. This may indicate the client is experiencing a change in their life circumstances or may be concerned about the markets, which suggests it might be a good time for the adviser to reach out to their client.

“Technology is enabling advisers to engage with their clients in an appropriate way at a time when clients need it most,” says Samantha. “It’s about looking for technology that can help you better understand your client, and alert you to things that you may need to be aware of.”   

When it comes to building longevity in an advice relationship, successful relationships are built through a solid understanding of the client’s needs and aligning the advice proposition to meet them.

“A digital advice experience is essential for building relationship longevity and will help sustain advice relationships by encouraging regular touchpoints, which are complemented by personal face-to-face interactions,” says Samantha.

“Trust is built through personalisation of the advice process and a feeling that a client’s adviser truly understands them. That’s where technology can help any adviser.”

Andrew Inwood is Founder and Principal of CoreData;

Eric Rocks is Vice President and Managing Director at SS&C; and

Samantha Hawkins is Head of Sales - South at Praemium.

The InvestTech 2023 sessions were moderated by Fraser Jack - Founder of The Cyber Collective.