With the technology underlying financial services continuing to evolve at pace, Mark Loosmore takes a step back to look at what that means for innovation today
What exactly is innovation? It is an interesting question. You might think of scientists or engineers with mad hair shouting ‘Eureka' as they burst out of their laboratories - or, in Archimedes' case, their bath - with a brilliant new idea. Or perhaps the story of the little girl who, watching many experts struggle to move a lorry stuck in a tunnel, suggested simply letting the air out of its tyres.
Right now, I am thinking of digital challenger Atom Bank's recent announcement it has started to offer residential mortgages, as the latest step in its bid to take on the high-street banking giants. Re-thinking the whole mortgage process and digitising it has allowed Atom to dramatically improve the time-to-offer for mortgage applications.
Through the use of leading-edge technology, it says it can offer mortgages that are great value, and a service that is fast, informative and transparent. In fact, it says that in some cases mortgage offers can be made on the same day. That, right there, is real technological innovation - it is such a simple and obvious thing to do from the customer point of view. And, for that reason, compellingly commercial too.
Apple's late, great Steve Jobs is often quoted as saying "Simple can be harder than complex: You have to work hard to get your thinking clean to make it simple. But it's worth it in the end because once you get there, you can move mountains." I think many of us would agree with the sentiment but how is it relevant to 21st Century financial technology? Let's think about the journey so far.
How did we get here?
In the beginning … fintech was a way of automating the simpler, more routine and time-consuming things human beings used to do. Goodbye, the Dickensian paper ‘in' and ‘out' boxes of customer service centres. Hello, black-screened terminal with green flashing cursor, the joys of data input and overnight batch processing.
Financial technology then evolved to helping humans do more complex things in more efficient ways. So ‘hello' real-time processing, improved data sharing, MI and exception reporting - to pick just a few examples. And that financial technology is evolving all the time, enabling providers and advisers to better serve the digital demands of today's customer.
Technology has fundamentally transformed the way financial services are delivered. It has also changed the way customers interact with their finances. People expect their financial information to be accessible 24/7. They expect to be able to engage and transact when and where they want. Increasingly that engagement is through mobile devices.
Indeed, we have very quickly arrived at a stage where some people are now questioning the need for human involvement at all. Human judgement - by some - is considered overrated and prone to emotional errors of judgement. And - who knew? - ‘intelligent' algorithms now appear to be an everyday topic of conversation.
Now, at least in this techie geek's humble opinion, I do not see technology replacing proper holistic human financial advice - at least not any time soon. I can only see it complementing and enhancing the advice provided and making the process far more efficient and scalable. Nevertheless, the doom mood music is there, quietly playing in the heads of some of the more pessimistic in the industry.
Innovation in financial services is all about making the complex simple. For advisers particularly, it is about delivering continual improvements to processes, improving reporting functionality and future-proofing businesses. Financial innovation delivers efficiencies and frees up more time that advisers can use to focus on providing valuable planning and advice services.
The real innovators now, I believe, are those who can take a step back and harness the power of financial technology to create useful, beautiful, simple user experiences that just do what their customers need them to.
Mark Loosmore is executive general manager (Wealth) at IRESS
