How to win clients for digital banking solutions: put the client’s interests first!

Fintech on Fridays

Increase simplicity for the advisor and the client by efficiently managing complexity in the backend! 

We live in an overwhelming world, especially so for banking clients. Every day new apps and opportunities advise on how to invest your money or on how to improve your finances. Despite all that, financial education is still at a low point and people don’t like to think about their finances. Under such circumstances how do you stand out and engage with clients while offering them what they need? 


Focus on 
offering the best experience and not on having many functionalities

It seems that among some financial institutions “more is always better” is still a widely spread notionOffering an abundance of functionalities in offline branches, appsor online banking portals does not help established players win new clients. Neither does having every conceivable app or participating in the latest tech trendMoreover, pushing funds, insurances, or other investment products does not inspire anyone to buy. It is just an attempt to scream the loudest. Competing based on product features, price, or marketing budget won’t get them far either 

What clients want is a solution. Instead of focusing on what productsbanks happen to have and trying to convince clients that they have a problemfinding a solution is keyEverybody likes to discover new solutionsso the clients should discover how a financial institution can help them with their concerns. 

Let’s play through an example: You aim to offer retirement investment product. One option is to tell your clients that they are going to need more money for early retirementFor this, your clients have to go through a lengthy questionnaire, bank statements, and masses of documents. And in the end, they find out that they won’t have enough money and should buy product XYZ. Not very exciting. 

How about using technology? By doing so, your client can add current accounts, investment portfolios and real assets (like real estate), all via API and done automatically by smart softwareAfter this process, you can indicate the potential retirement gap in a simple number: the probability of reaching the retirement goal. If that number is low, you offer to take care of this and let the client invest without much fuss. Over time you keep the client updated by showing how the probability changes according to market movements, saving habits and other factors. The client doesn’t care about the backend product as long as that probability goes up. To clients, it is important that their needs are your top priority, not the product.


Seamless integration and Simplicity

To achieve seamless integration and to build a simple application that is both fun and efficient to use, I want to propose a motto: Manage the complexity, so your client can enjoy simplicity. 

A single probability score relies on a lot of complexityTo be precise, here are some examples: Connecting the different APIs to information providers, checking markets and calculating the probability, keeping an eye on account transactions checking if there are any changes for the client. Amid all these complexities, it is essential to pay attention to the integration between accounts, your backend, the frontend systems, and the investment product. Only through handling the complexity for your clients, you can win them over.  potential client that has to jump through countless hoops to connect the problem (e.g. retirement gap) to a solution (e.g. your investment product) won’t become a client.  

The same applies to different functions that try to give your clients a better understanding of their financials. When client has to use 5 different apps in order to get a view of all assetsthose apps won’t be used at all. Everything needs to be seamlessly integrated:

Wealth aggregation that gets connected to financial planning.  

● Current account analysis that automatically leads to the retirement gap.  

● The retirement gap that can be filled automatically with the right investment product.  

● Progress report based on the product’s development and current account status.  

● The better integrated all these functionalities are, the better a client perceives your offering.  

To sum it up: Make sure to offer smart features, but not only for the sake of having them, rather have a simple and coherent process. Have a strategy on how to integrate new features into a compelling customer journey that seamlessly leads from one offering to the next. This will let your clients perceive taking control of their finances as easy because they will have trust in you to handle the complexity.

See how simplicity can grow out of complexity:

 

 


Financial Advice 2.0: Inventing super-human advisors

Fintech on Fridays

In a world where technology is ever-changing and regulations ever-increasing, human advice is costly, ineffective, and risky. Robo-Adviceon the other hand, doesn’t resonate with clients on a personal level. Now, what is there to do? Here the Cyborg, the Hybrid-Advice philosophy enters the scene. human advisor with techsupported superpowers. 

The best of both worlds: efficiency with a human touch 

The problem today is, that human-centered advice is more expensive than ever. And clients are reluctant to spend money on itespecially when there are alternative services in the market available free of charge. Regardless of the availability of such services though, customers still have complex needs. And the faster financial markets advance, the more complex those needs get. A demanding regulatory environment for banks and their advisors puts them in an unpleasant spot. So, what is the current quick-fix given these circumstances? Private banks increase the minimum assets required to become a client or they abandon the typical financial advice altogether. Some banks and Fintechs try to disrupt the market for financial advice with Robo services, but with mixed success. What are the main obstacles for both? Robo Advisors lack the human touch and Private Banks are less efficient.  

The answer to this challenge is technology that enables financial advisors to be more efficient in targeting the right clients and giving them personalized proposals. Instead of going through many different lists and investment guidelines (blacklist, recommendation list, etc.), the software handles the process. Instead of checking if the proposal is within the boundaries of the portfolio, or if any client or bank-restrictions are violated, the software can handle that within secondsThe advisor can focus on the needs, wishes, and financial status of the client. You tease out what the client needs, manage the relationship, and the software calculates the right portfolio, the right products, gives you the right story with every possible recommendation and handles all regulatory aspects for you. 

“Humans lack efficiency and Robos lack humanity. Give advisors super-human capabilities by supporting them with software in a hybrid advice model. Give them the power of software efficiency with a human touch 

How to save 10 weeks per year for every advisor

Imagine you offer your advisors a tool that frees up 10 weeks of their time every year. 10 weeks focusing full time on the client. Establishing and caring for better client relationships. Here are practical ideas on how to get there: 

1. Be clear about your investment philosophy and set up a clear investment structure and process that contains:

● Categorization of Risk Profiles (How do you categorize your client’s risk profiles?)
● Risk and Strategy Offerings (What investment strategies or risk levels do you want to offer?)
Mapping of risk profiles and risk levels
Asset Allocations and Time Horizons

2. Set up a regulatory compliant advice journey that includes:

Sufficient Regulatory Information
Regulatory Restrictions

3. Define your investment universe

Set up a set of securities that you wish to use as possible investments for your clients
Include buy/sell/hold recommendations from your research

4. Define bank restrictions on the allocation

Have a blacklist containing, e.g. non-ethical investments
Have certain risk boundaries for asset classes or single investments

5. Give your client and advisor the possibility to include their wishes

Ask if the client wants to limit exposure to an asset class or investment
Ask if the client has a blacklist or darling stocks  

6. Connect for a seamless and efficient process

Integrate the advice software to your core banking system to process orders directly
Automate regulatory reasoning to have a compliant and transparent decision process 

All of these proposals can be configured and extended to your business model.  With our hybrid Advice Softwarefinancial advice gets more reliable and transparent without losing individuality and gives you the edge in a competitive market space.

 

How to harness the powers of Open Banking

Fintech on Fridays

How PSD2 and Open Banking will change our view and ease of wealth aggregation and how banks can use it to their advantage.

Open Banking and PSD2 are associated with several problems for banks: costs, loss of data, increased competition, and increasing regulatory burden. The implementation deadline is near and very little banks have a clear proposition on how to use it instead of just complying with PSD2. What if I told you, that you can use Open Banking to win new clients to start new business models? And that you can increase client satisfaction and your share of wallet?

How to make your clients love you

Here is a common view on Open banking: Financial institutions have to create an API, which they might not be very familiar with. They have to share data about their clients, which competitors could use to take business away. And last but not least the costs of complying with PSD2 are increasing. But here is a not-so-obvious view:  By offering the more compelling proposition you can leverage your existing client base, your brand and the trust clients have in you to understand your clients better. Moreover, you can offer them more value and increase your share of wallet with the client.

Open Banking does not have to stop at current accounts as PSD2 does. Imagine the possibilities: You not only can connect current accounts, yes, (yawn!), but also: portfolios, real estate, private equity, cryptocurrencies, cars (yes, all of those data points can be delivered to your clients at their fingertips). Aggregate wealth and analyze transactions to give the next best actions that fit perfectly to your clients’ needs.

Answer important questions for your clients:

•How much am I worth?

•How much can I save and how much do I need to save to reach my goals

•Does my asset allocation fit my needs?

As a bank you can get valuable information about your clients:

•Did I advise them correctly?

•How much is my client worth? Does that change the way I treat him/her

•What other offerings would this client profit from?

“If you connect valuables of your clients, you’ll be the financial center for all their needs”

 

How to be the center point of your client’s financials

Now, how can a bank achieve digital excellence and connect to new clients? The answer is easy. It should deliver apps and solutions that offer real value for their clients.

Here is a roadmap to excelling in your business:

1. Think of a clear business case and what you want to achieve, e.g.

•Find out more about your clients

•Increase client bonding

•Increase your net promoter score

•Get new assets

2. Think about how you want to achieve this

•Focus on current accounts and use them as an example of retirement planning

•Use holistic wealth aggregation to give better portfolio advice in the context of financial planning

•Use aggregation to better target promising clients in your sales funnel

•Increase your assets under advice by comparing your expertise with existing client portfolios

3. It helps to know where your proposition is better than the rest

• Do you have a strong investment office?

•Can you offer a wide range of products?

•Do you have an extra trust factor?

•Are your services cheaper, more diversified, better performing than others?

Such digital tools based on Open Banking can help you to show clients digitally and easily how they will profit from working with you. And all that in an automated and scalable manner.

 

 

5 tasks your investment software can’t execute

Fincite 5 tasks your current Investment Software can´t execute

The digitization of the financial industry often progresses only cumbersome. Great successes or changes usually come from the emerging challengers or “online-only” banks. The established players are trapped in legacy systems that are not up to the pressure of digitization and regulation. 

This applies especially to investment processes. From consultation to portfolio design, steadily falling margins meet with high manual effort in all areas. In the field of tension between compliance, process costs and the desire for differentiation, existing technology often blocks the future. 

The following five points describe which tasks your current investment software is unlikely to perform and what added value you can expect from modern software.

 

1. Your investment software has too little data about your customers and their value(s)!

Open Banking offers new ways to gain a holistic view of your customers. The linking of accounts, deposits and other assets makes it possible to capture the financial situation of your customers faster, more detailed and more comprehensively than most existing investment software can.

With Fincite.CIOS, financial service providers can capture all their clients’ accounts, deposits and other assets (real estate, private equity, etc.) in a 360° view. Based on this hollistic view, CIOS provides recommendations for individual actions either directly to the customer or as a sales impulse for the consultant. With our Software the consultant gains an understanding of the client and the customer lifetime value.

 

2.You can´t automate your investment process with your existing software!

From collection of the financial situation and the risk profile up to the investment compliance and documentation there are many – often manually carried out – steps which cause high process costs and compliance risks. Most consulting or portfolio management systems often lack an end-to-end view for effective automation. But the processes of investment consulting or asset management can be automated to a large extent.

Fincite.CIOS digitally maps the processes from recording the financial situation to portfolio construction and order generation. This end-to-end process saves more than 25% of time per customer per year. In addition, automated processes can almost completely prevent violations of investment restrictions.

 

3. Your investment software is not a front-office system and can´t be customized!

Portfolio management or advisory systems are not built for customer contact. They rarely view their customers holistically in terms of their financial situation, current portfolios and individual opportunities.
Existing systems are often far away from the vision of financial service providers of a fully digitized and highly customizable process. Rather, they deal with questions such as:

– How many individual customer portfolios can the software manage?
– What happens if more than 100 customers access the software at the same time?
– How can we deliver an outdated user interface to the customer to meet reporting requirements?
– How can data fields for the MIFID2 reporting requirements still be integrated into the existing system?

Fincite.CIOS is designed for highly customized client portfolios and digital interaction. Our software includes the ability to provide your clients with real-time insights into their assets with a visually sophisticated and modern dashboard. Digital interaction and excellent communication processes will increase your customer satisfaction and loyalty and empowers your advisors.

 

4. Your investment software does not enable a fast roll-out

The world of a financial service provider is complex. Through several channels (e.g. consultants, online, mobile, distribution partner) different service models such as self-execution, investment advisory, and asset management models are sometimes rolled out across different customer segments (retail, mass affluent, private banking) in several countries.
Existing investment software is often not designed for this diversity and different purposes. 

Fincite.CIOS enables financial institutions to implement different service models on one software using a process mapping layer. Modern REST or GraphQL API layers allow access to the logic across different channels. To date, international financial service providers are already using CIOS’s multi-tenant environment to extend their consulting and portfolio management processes to multiple countries. All for a fast rollout.

 

5. Your investment software does not maintain a relationship with your customers!

The Markets are changing. And with them often the financial institution’s evaluation of asset allocation and individual products. But customers also change. Their financial situation and thus their risk profile can develop. It is just important to check these changes regularly (a requirement according to MIFID2 by the way) and to implement the recommendations of the Investment Office in the client’s portfolios as good communication – especially in times of crisis. In many cases, existing investment software does not meet these requirements.

By continuously linking the financial situation and providing market data, research results and signals, CIOS offers the basis to keep the client portfolio in shape and to provide clients and/or their advisors with specific knowledge for every market situation.

5 tasks your investment software can't execute. Fincite

Assets under View – a new KPI in Banking

Fincite Blog Assets under View AuV

Did you know that we reached the “Multi Banking Era”? Since this year, the Revised Payment Services Directive (short PSD2) is in place. PSD2 allows Banks, Fintechs and other players to get current account data and do transactions on their client’s behalf. There are two ways banks are approaching this:

1. Burden: Banks that see PSD2 as a cost factor and threat to their business as Fintechs and other service providers can make use of the client’s data and do payments.
2. Chance: Banks that see PSD2 as an opportunity to provide better services, to get a more holistic view over their client’s total wealth… and thus: better service.

To empower those who see the chance, we at Fincite suggest leveraging a new Key Performance Indicator (KPI):

Assets under View (short AuV)

Assets under view are the assets of a client that are not held at your bank, but that are added to your multi-banking application.

Why Assets under View are so important

Currently, the most important figure for any Robo Advisor is Assets under Management (AuM). But how to manage a good pipeline that increases AuM? If you look at Online Marketing basics, you see the classics: Click rates, time on a website, registered users. All are important for the funnel, but they do not indicate the value of the client. If you look at AuV and measure the conversion from AuV to AuM, you learn how big your pipeline really is. You can calculate conversion potential and if the solution you offer finds trust and traction. You basically know the customer lifetime value before he becomes a client.

What does it tell me?

One million EUR AuV based on 100k clients indicates a different target group as a million EUR AuV by 10 clients.  You can also see if the clients trust you. 100 registered clients do not mean much. If 90 of those 100 trust you with their financial situation, it means a lot. You get a very clear vision about your pipeline, for example:

1. 100 potential clients visit your website
2. 60 registers for your free service
3. 50 trusts you with their assets -> AuV
4. 20 sign up for your paid service

Before you went from registered users straight to AuM, not knowing what happened in between. Now you have a new KPI, that can show your traction in the market. Are people trusting you? Now, you can steer clearer, where you have to put more effort in, to convert. You can better focus on the client’s pain points and show the potential of your solution.

Where the market will go

We at Fincite believe, that PSD2 is not a threat, but an opportunity, if you have the vision to use it properly. Build services around PSD2 that show your expertise, whether it is investment advice, portfolio management performance, or other services. Account Aggregation and Analysis let you analyze client portfolios at other banks and let your clients see the unique expertise and the edge you offer.

Summary

The new KPI Assets under View is a very important measure to steer your client acquisition efforts. And by getting Assets under View you can show the clients, why you offer the best service and have a good approximation for the customer lifetime value.