Fintech Integration: It shouldn’t be Kryptonite for Financial Advisers
Over the next three to five years, 47% of financial services firms plan to invest in fintech — part of a wave of change which has swept over the industry, according to research by Capco.
When ‘fintech’ firms first appeared, they were greeted with alarm by incumbents in the industry, with JP Morgan’s Jamie Dimon saying in a letter to investors: ‘Silicon Valley is coming.’
But increasingly, fintech firms won’t look to replace existing businesses, but integrate and work alongside them, according to Steve Andrews, Head of Managed Services at fintech software company Focus Solutions.
“Advisors now more than ever are looking for software that can integrate, because it provides a huge efficiency gain”
Andrews says: “It’s no longer about you doing everything. It’s always been a fraught issue in our market. The approach to technology has been that firms think, ‘I’ve invested in my kit, my software, why would I integrate?
“People imagine that something their software does, some piece of functionality, is their USP. But it’s changing. It’s not about having everything in one piece of software any more: it’s about having technology that will integrate and complement each other to deliver the most benefit for the end users.
For customers, integrated products will allow access to all their financial affairs in one place, in the same way as someone might look at an Experian report now.
“What needs to happen is that all the different parts of the market, the software houses, the platforms, the fund managers, all need to be singing the same tune,” Andrews says.
“With Open Banking and PSD2, it will allow advisors to bring in transactional banking information in alongside data from all parts of the market, to offer a holistic view of their clients financial position, all in one place.
For financial advisors, software that can integrate well will have many benefits, as it will allow them to operate more efficiently, as well as being able to deliver modern digital services to a wider number of their customer base.
“Advisors now more than ever are looking for software that can integrate, because it provides a huge efficiency gain,” Andrews explains. “Software providers who can provide those efficiencies will be the ones who do well.”
In the past, many firms have been resistant to integration, leaving advisors keying in details for customers over and over again.
Integrated products can offer a significant time-saving for advisors, which translates directly into cost savings and in turn, better service levels.
“For an advisory firm, if they can get a solution that will work with a number of systems, it’ll be significantly more efficient ” Andrews said. “That means that advisors can offer more services at a lower cost, catering for the needs or a wider consumer base at different stages of their financial life”
For Focus Solutions, integration has always been a goal, and it’s something that the firm hopes to increase, Andrews says.
“What we’re keen to focus on is that these integrations provide significant enhancements to our software functionality, and to focus on where these integrations will make the most difference for our customers.”
“We’ve always got an eye on integrations, we certainly see ourselves as both back office and front office,” says Andrews. “There’s certain calculations or certain bits of analysis that we will never do. If it’s a key part of the process that an IFA would require, we’d look to provide integrations.
“We provide basic integrations with some third-party tools: we capture client details, fire off that information to a third-party piece of software, and get quotes back.”
But Andrews says the firm is looking to provide ‘more and more’ in the longer term.
Andrews says, “We’re looking for it to be the norm in future.
“We are really looking at what our API strategy should be, how we can provide data in a format that can move in and out of other systems. What we’re keen to focus on is that these integrations provide significant enhancements to our software functionality, and to focus on where these integrations will make the most difference for our customers.”
