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Cautious optimism and a customer-first approach for financial services in the 2020s




Alessandro Tonchia, co-founder and head of strategy at Finantix, looks back at the financial services industry over the last couple of decades and gives his predictions as we enter a new decade.

As we enter a new decade, technological innovations will continue to evolve at high speed, however we believe there won’t be one specific technology that is going to stand out as the disruptive force changing the financial services market. Looking especially at the advisory space, which requires a comprehensive understanding of clients and their needs and the ability to find optimal strategies and products, we have identified four specific areas that we believe financial services professionals, should focus on as we head into the 2020s.

Alessandro Tonchia gives his fintech predictions as we enter a new decade.

#1 AI is the real deal to underpin better customer service

One irrefutable benefit of the ‘newer’ technologies is the power of AI on operational tasks. Labour intensive manual checks are becoming more and more redundant as we leave the days of human error fast behind us.

Appropriately configured, AI can improve both productivity and intelligence on clients. It can help in many use cases that currently require considerable amounts of time and often involve repetitive tasks:

  • preparing agenda and content for a meeting in a compliant and personalised way
  • screening databases and news archives for both risk-relevant and commercially interesting information on prospects and clients
  • checking an investment proposal for compliance with different regulations and client constraints and preferences
  • scanning news and research selecting the elements that are more relevant given the investment strategy and market exposure of a given client.

The valuable time employees spend preparing, collating and checking can instead be allocated to something software cannot do – using human judgement and experience to provide a superior service to their clients, assessing risks and opportunities and providing clients with a smooth and personalised dialogues and experiences. AI is also a key ingredient in supporting the trends we discuss below: improving customer experience, servicing a global clientele and effectively dealing with regulations.

#2 Customer experience will reign supreme

The industry executives we speak to on a daily basis need no convincing of the many benefits that come with having a customer-first approach to business. The ideal customer experience is clearly envisaged in their minds, so as we head into the 2020s the highest priority will be how they should achieve it, rather than why.

AI has the immense potential to unveil goldmines of rich client intelligence which can be used to support extreme personalisation, but unless time is put into creating a solid methodology to support such change, technology alone will only get you so far.

If we look at the early stage of client relations, we can see the need to implement methodologies across all key stages of the client acquisition process from prospect profiling, qualification, pipeline management, silo-breaking and ownership, and precision selling. Only then will the power of client intelligence and CRM technology come to fruition.

#3 Winning the geography game

Not only there is opportunity in accessing global markets, but also domestic players see benefits in addressing the increasing ethnic diversity of the population. Foreign languages and sensitivity to cultural differences is clearly an area that needs to be handled with care more than ever. Whilst translation technology is getting increasingly sophisticated, overcoming language barriers is only the tip of the iceberg if authentic customer relationships are to be realised.

For example, the issue of ascertaining which language a client speaks is not trivial. A prospect could have a Spanish name, own a Spanish company and therefore be mentioned in the Spanish press, but at the same time they might live in the US and not speak Spanish, or at least not by preference. Rather than going in blind and hoping a prospective client speaks a certain language, AI can enable the ability to attune strategies to a prospect’s evidenced preferences.

With AI technology by ‘reading’ all available data sources firms can gather information that will help foster relationships previously out of reach, such as a prospect speaking three languages. In turn, AI analytics can uncover what the most popular languages are, mapping the current and target client base to discover that perhaps you need to hire more Spanish-speaking advisors.

# 4 Regulation is here to stay, but attitudes toward it could change


Regulation will continue to drive spend on automation from a transparency and auditability perspective. Not surprising given the amount of regulatory scrutiny that financial service organisations are subject to, particularly around the area of investor protection (MiFID II in Europe, similar regulations elsewhere).

As we reflect over the last couple of decades and as post-crisis regulatory fatigue dampens, is it possible that we will see some regulations less as a necessary burden and more as a way to achieve other goals? To go back to MiFID II, when it went live, firms had band-aid solutions in place, cobbled together to tick a compliance box. Now, firms are thinking in a much more conscious way about the balance between compliance as a need and to become client-centric, to give the right advice, to be almost making a virtue out of the compliance hurdle. And they are thinking, as the dust has settled, how they can be effective from a sales point of view safe in the knowledge that what they are selling is in line with the regulatory rules.

There is clearly a wealth of opportunity available to financial services professionals which will only become more abundant. In our experience, the financial services industry would be wise to start small, focus, then build out.  It’s also worth looking at other industries’ applications of these technologies, borrowing best practice examples from them, and applying them to their specific areas of specialism. Last and by no means least, firms should select technology vendors who can do the cherry picking on their behalf and create the differentiated, digital, and dynamic service experiences that will give them the edge.

By Alessandro Tonchia, co-founder and head of strategy at Finantix

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