Mirror, mirror on the wall, what is the best product of all?
APIs (Application Programming Interfaces) are the new “magic mirror”, opening up a wealth of information curated by someone else who maintains and updates the data. We use them regularly,
“Hey Google, give me directions to Martin Place”.
Financial services have been invited to the “magic mirror” club. Consumer data right (CDR) was launched two years ago in Australia promising real-time, reliable and rich financial data. Financial institutions make their API available to external developers so users can access their products and services.
“Alexa, open CBA home loans”.
Financial planners are stuck in a slow, expensive and largely paper-based process. The “hard copy” fact find is typed into the financial planning “sausage machine” software by a paraplanner who usually never meets the client. There is no opportunity to test different strategies or examine a product of interest to the client. It’s a packaged process and adding complexity increases the chances of delay, errors and costs.
APIs could allow financial planners to examine, discuss and recommend products using CDR. Omnium for example offers an API that compares a wide range of risk products (with ratings) and even allows applications to be lodged. Using Finchat’s technology, an adviser could examine products and strategies using natural voice, without using a keyboard or looking away from a client. The “magic mirror” joins the meeting, short circuiting a cumbersome process.
“Alexa, let’s calculate the benefits of salary sacrifice contributions”.
Over 100 banks in Australia share data, from transaction accounts and credit cards to mortgages and personal loans. Where a product provider doesn’t use CDR, a “scraper” (a program that “scrapes” the data off your online account) can be used, but there are security concerns. How securely are your log-in details stored by the scraper? Are they destroyed if you leave? In Britain, scrapers can only be used if CDR isn’t available.
Financial planning needs to be more efficient to thrive. About 10,000 advisers have left the industry in the last few years and a lot more are expected to follow. “Adviser Ratings” predicts numbers will fall to 13,000 by the end of 2023, down from 28,000. Research conducted by KPMG and commissioned by the Financial Services Council found the average cost of providing comprehensive financial planning advice is $5,335 a client, while the average cost charged was $3,660.
It’s time for a new, compelling, differentiated advice model, using the latest technology.