The technology buzz has certainly grown in the private banking and wealth management industry, after a relatively slow start. This year’s Finovate Europe that took place in London showcased more innovations in the sector than ever before. John Schaffer highlights some of the presentations that piqued PBI’s interest
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Technology provisions for the private banking and wealth management industry dominated at this year’s Finovate Europe event in London (9th-10th February), with an array of robo-advise/investment management service providers as well as tools available to assist with regulatory requirements and security being showcased.
The popular, annual financial technology (fintech) event’s format allows a selection of start-ups as well as established firms to pitch and demo their new products to a room full of bankers, financial professionals and journalists. The presenters are limited to tight seven minute slots, in a bid to impress the audience.
This year’s event further touted the rise of digital disruption in the wealth management industry. Engagement of millenials and less sophisticated investors was a key theme, with some presenters using marketing ploys such as using emoticons as a search tool to engage the next generation. PBI highlights presentations that impressed:
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By GlobalDataInvestglass
Investglass is a robo-advisor service that is targeted at relationship managers (RMs), rather than end clients. The service, launched in September 2015, uses a tagging system to make it easier for RMs to search through clients, via their preferences. The tags classify information, which is separated by clients, securities and research documents.
Bankers can contact their clients on the basis of information surrounding a tag. For instance, if a particular security is performing poorly – the tagging system will indicate the associated clients and suggest that the banker gets in contact with the client.
The software also provides advisors with investment proposals, which Investglass says are based on "hyper targeted leads" because of the bespoke nature of the tagging system.
Backbase
Backbase’s offering is a widget based software platform for the wealth sector through its Backbase DBP product. The system allows both banks and clients to customise their online dashboard, with the ability to tailor the front end digital experience to their liking.
Backbase, veterans of the Finovate event, already have a significant uptake with over 60 financial institutions already onboard. Key clients include ABN AMRO, Barclays, Goldman Sacs, Metro Bank and C. Hoare & Co.
Jelmer de Jong, global head of marketing at Backbase, told PBI:
"The reason that banks select us is our time to market. With a platform based on widgets, it’s easier to go live quicker. It’s a modern architecture – most of the other systems are from the 80s and it’s very hard to innovate on that old technology.
"Our platform is fully stocked with out-of-the-box widgets, which help you to have a blueprint for the basics that you can then develop on top of."
Backbase’s proposition also allows private banks and wealth managers to develop their technology systems using Agile methodology – a process whereby changes to systems are made in an incremental and iterative fashion, rather than creating the whole system all at once.
De Jong says: "With widgets, you can upgrade small components and small functionalities when necessary, so you can go live with a way more agile approach and with more flexibility." End users can also edit their digital experience using widgets. However, de Jong told PBI that not all banks opt in for this as they prefer to keep the digital platform static.
Investify
Investify is an investment management proposition, targeting affluent and retail investors. Much like other robo-advisors such as Nutmeg and Wealthfront, the service creates investment portfolios for different risk profiles alongside a low entry level of wealth.
Investify sets itself apart by its integration of "thematic investments". Here, users can allocate a portion of their portfolio away from pre-made solutions and invest in an area of their choice.
During the presentation, the thematic approach was demoed with an allocation towards renewable energy. As the user’s allocation was gradually increased, an error message appeared suggesting that the increased allocation would not be compatible with the chosen risk profile.
The thematic investments section of the application has been designed so as to make investments accessible for less sophisticated investors. Users also have the option of not customising their investments at all and using the pre made portfolio offerings.
OutsideIQ
OutsideIQ presented a software platform that uses artificial intelligence (AI) to conduct due diligence requirements. The company claim that the time taken for client onboarding of both companies and individuals is significantly reduced, as the burden of research is limited via the software’s use. Human error is also taken out of the equation and, due to the speed of the service, banks would be able to perform compliance requirements at scale.
OutsideIQ’s featured product, DDIQ, was released in March 2015. The company describes the product as "automated investigation technology", which allows financial institutions to identify sources of risk within their Know Your Client (KYC) workflow, via an Application Programme Interface (API), which can act as an extension to an existing technology system.
The software builds a profile of an individual within 2-10 minutes and splits potential risks into regulatory and reputational sections. DDIQ also scans through social media feeds to build a profile of an individual. However, this element appears to be somewhat peripheral as fraudulent details, in general, are unlikely to be revealed publicly and the software does not scan through private messages.
Dan Adamson, president and CEO at OutsideIQ, told PBI:
"A lot of private wealth managers were Googling and trying to assemble content to build up a case for onboarding their clients. There’s a conflict there. Firstly, it’s not necessarily their day job; secondly, it’s not necessarily in their best interest to find anything; thirdly, they’re probably doing it late at night when they’re tired. There’ve been several instances when it’s been proven that that’s not good enough.
"Then they either have to move into their own compliant back offices to do this work, or they outsource it – and that’s expensive for them.
"Over the last six years, we have developed a cognitive computing platform that emulates what an Anti Money Laundering (AML) investigator would do for these clients."
Adamson added that OutsideIQ has two of the largest North American banks onboard with the software. In total, they have 30 clients and around a third of them are using the software for private wealth purposes.
Envestnet
A provider of integrated portfolio, practice management, and reporting solutions to financial advisors and firms, Envestnet encompasses a broad range of research, investment products, and advisory resources.
The Envestnet Advisor Suite aims to transform the wealth management sector beneficially, and give financial organisations and advisors the tools to "conquer complexity and drive success".
US-headquartered Envestnet is foraying into the European market with its Advisor Now platform and is being supported in this by Yodlee, a cloud-based platform driving digital financial innovation through big data. Envestnet completed the acquisition of Yodlee in November 2015, and the latter has a global network.
Blake Wood, senior vice president, product management at Envestnet told PBI the presence at Finovate Europe was mainly to signal the intent of expanding in new markets with the Envestnet and Yodlee combined offering.
"We have already deployed our large wealth management advisory platform in the North American market. Adviser Now has the ability to extend traditional advisors’ and their financial institutions’ capabilities to a purely technology led business solution or a hybrid led business solution."
Wood added: "Envestnet really believes that the advisor plus technology is going to lead to better outcomes for investors. It’s not going to be purely robo-play that will get investors to their goals."
