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It’s undeniable that technology pervades our everyday lives; from watching a film on demand, to booking a taxi on an app, to ordering our grocery shop through Alexa. Over recent years we’ve embraced new technological breakthroughs and have slid easily into using them on a daily basis. However, technology is also being used extensively to improve our financial lives. The rise in ‘fintech; is supporting us in many areas, whether that’s paying taxes, finding insurance quotes or getting financial advice.
Price comparison websites are perhaps the most well-known example of how technology can take the pain out of mundane financial tasks. They are now an accepted part of our lives, whether we are looking for travel insurance, utilities or bank accounts. Many of us probably can’t remember the last time we bought car insurance without first starting our search on a price comparison website.
We’re also seeing major fintech developments in the banking sector. Since January 2018, Open Banking regulations have required Britain’s nine biggest banks to share data with approved third parties such as budgeting and financial management apps. If you give them permission, these apps will analyse the data provided by the banks and can even make recommendations about things such as how we should manage our money, or how we can get access to better credit. Open Banking is arguably one of the biggest developments in the world of finance in the past few decades and hundreds of fintech companies are developing technology-driven solutions that will become our essential tools of the future. While it is still early days, we think this is an extremely important development and we expect there to be a great deal of positive change in banking in the coming years.
Aside from Open Banking, the area we at Wealth Wizards find most exciting is the potential for technology to completely transform the pensions and retirement financial advice landscape. Pensions are extremely complicated products – and retirement is possibly the most complex financial issue we ever have to deal with in our lives – but at the moment many people can’t afford traditional financial advice which would help them make the right decisions about saving for, or drawing, their pension.
We believe that advice should be affordable and accessible to everyone and technology is a key way to do that. Wealth Wizards works with advice firms, including LV=, to create a hybrid advice model that is part human adviser and part automation. The Wealth Wizard system helps with heavy lifting of things like digitising fact-finds, assessing income and expenditure needs, automating quotes and shaping recommendations into suitability reports. This allows the adviser to focus on the customer engagement and ensuring the final advice is truly personalised to someone’s needs and preferences. For the adviser, this means they can save a huge amount of time and, for the customer means a much faster, more convenient process. Advisers may be able to use this saved time to help more customers with advice and develop new lower cost advice propositions – allowing those people who previously couldn’t afford advice to access it.
More generally within the pensions space, online retirement income calculators, and the soon-to-be launched pension dashboard, are also making retirement planning more transparent and easier to manage. The pension dashboard should allow savers to see all of their pension savings in one place – making it both easier for them to understand their financial situation, as well as any financial adviser working with them. Once people know what they have saved in total, it will be easier for them to understand if they are on track for the lifestyle they want in retirement, and could encourage them to make changes if they aren’t.
But it won’t stop here. We believe we are only just beginning to scratch the surface of the benefits technology can bring to financial services. The rise of the digitally-savvy millennials and then Generation Y will lead to further changes as these younger generations demand more technology-led solutions. The UK is set to be a leader in this space, with a recent report from KMPG revealing we remained the top destination for fintech investment in Europe in 2018, with more than £16 billion in funding - almost four times more than in 2017.
Within financial advice, we predict artificial intelligence will feature strongly in solutions in the future and that every financial adviser will eventually be supported by automated platforms. We believe that through its role supporting the small business community, the financial advice community and people across the UK, fintech truly has the ability to transform how we spend our money, how we save it, and how we plan for our retirements.