The ‘Unbundling’ of Financial Services & Opportunities for Innovation
With Kyan having recently been shortlisted in the Wirehive 100 Awards for our work with a Fintech startup, SaidSo.co.uk, the issue of technological disruption in Financial Services has struck me as an interesting topic when held in comparison with what’s already occurred in other industries.
In early 2015, Tom Goodwin of Havas Media made a telling observation that:
“Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate.”
It is these Platforms that are providing convenience, service and experience rather than the underlying assets that are actually dictating the future of many industries. When a previously complex or needlessly over-complicated supply chain can be simplified into an intuitive consumer interface, that industry can be thought of as being on the precipice of disruption.
The Founder of the World Economic Forum, Klaus Schwab has coined the phrase ‘the Fourth Industrial Revolution’ to reference this rapid development and adoption of new technologies and consequent product development. Discussing the topic, he writes:
“A key trend is the development of technology-enabled platforms that combine both demand and supply to disrupt existing industry structures, such as those we see within the “sharing” or “on demand” economy. These technology platforms, rendered easy to use by the smartphone, convene people, assets, and data — thus creating entirely new ways of consuming goods and services in the process.”
Financial Services
A notable absence from the major, industry-wide upheaval discussed above however is Financial Services (FS). While technology is fuelling rapid innovation, such as the use of machine learning and other aspects of artificial intelligence to aid decision-based areas such as lending, or the implementation of anomaly detection to help identify fraud or assess risk; this is mostly out of sight from a (mainstream) consumer perspective.
FS still hasn’t had the kind of major, platform-based overhaul seen in transport or media distribution for example that irretrievably changes everything. Instead, what we’ve seen is the ‘unbundling’ of individual components of FS, with startups able to outperform traditional providers in a single specialist function.
Consumer-focused innovations such as mobile payments, crowdfunding and cryptocurrencies have successfully launched, but have mostly just complicated the landscape at this point due to differing levels of adoption and degrees of success. This highlights the importance of context in defining opportunities as it is context that transforms the application of these individual technologies from simply being alternative options, to becoming so overwhelmingly superior that they feel compulsory.
SaidSo — The Opportunity
It was context that created the opportunity for the development and consequent success of the SaidSo platform, an example that seems representative of the trend.
A number of factors had contributed to providers of Financial Advice becoming vulnerable to services that could quickly respond to market changes. Restrictive legislation had been passed that dictated who could and couldn’t provide financial advice. This was stated as being in the public interest of protecting consumers from being advised by the same organisations that also sell commission-based products.
Running concurrently, auto-enrollment pension policies introduced by the government resulted in over 6 million people saving for their futures who were not previously. Financial planning had become a key talking point for the media and a priority for many individuals that may have otherwise felt it did not apply directly to them.
So there was increased demand from a new, emerging audience segment at the same time as limitations were being placed on the institutions that have traditionally provided this service. There was also an opportunity from a build perspective, as financial advisory services have historically presented simple websites that effectively just serve as brochure replacements. In order to receive any kind of actual service, consumers are typically still required to contact the firm and conduct an ‘in-person’ meeting.
This runs in contradiction to how most consumers now search for, consume and interact with information online. For firms able to offer a service with an immediacy not otherwise commonplace in the market, there would be a significant commercial ‘early mover’ advantage in launching a quick, easy to use online offering.
Building SaidSo
Against a backdrop of intense media speculation and discussion over the implications of the radical changes occurring in this sector, Kyan received a brief from start-up, SaidSo.
SaidSo had identified a market opportunity to develop an online platform that could act as an affordable entry point for online financial advice. The brand also aimed to occupy an interesting niche, providing an entirely online customer journey, but connecting consumers with actual (human) financial advisors.
This runs in contrast to the existing automated ‘robo-advisors’ that provide algorithm-based portfolio management advice. Keyword research revealed this was actually an existing pain point in the customer experience for many, who went on to search for alternative services after being dissatisfied with what they felt was an impersonal, automated service.
Industry Response
SaidSo has won the Open Innovation category in the Investment Marketing and Innovation Awards, praised for its consumer-focused outlook and for being so responsive to market trends. In winning this award, SaidSo beat off competition from household names such as Zurich and Quantifi.
The site also received the Bronze Award in the Surrey Digitals in the Responsive Website Category, and is currently shortlisted in both the Wirehive 100 Awards for ‘Best Consumer Site’ as well as the ‘Innovation in the delivery of financial products’ category in the Financial Innovation Awards. SaidSo has clearly made a significant impact from both a technical and industry perspective.
Takeaways
The media, industry and consumer reaction to the launch of a platform like SaidSo underlines the continued vulnerability of Financial Services to the ‘unbundling’ of individual components that can be delivered more effectively, more affordably or simply more efficiently by a specialised startup platform.
Whether we’ll ever see the type of total disruption already discussed by the likes of Uber et al. in other industries is more uncertain. The development of the Internet of Things, 3D Printing and Quantum computing among other emerging technologies will continue to provide new opportunities perhaps even beyond those immediately anticipated, but the major industry players are reacting. Many of the largest banks have already launched fintech investment arms, in-house incubators and other measures that attempt to exercise greater control and influence.
For the time being, innovative new products and solutions will continue to be developed by small, agile teams that pose a risk to the established market share. Provided with the right opportunity, whether it’s through legislation (such as the set of reforms recently issued by the Competition and Markets Authority), socio-economic factors or simple circumstance, it’s likely only a matter of time before we see a further generation of products and platforms that completely change the way we think about how particular financial services are delivered.
Bringing business ideas to life through the intelligent use of technology and design. Kyan works with startup and enterprise-scale businesses, providing the technical expertise that underpins a successful product build, launch and consequent development.
Originally published at www.linkedin.com.
