There are few areas of the financial services industry that haven’t been touched by Open Banking. Open Banking is when people give consent to third parties like Moneyhub, to access their banking data to benefit from smarter and more tailored products and solutions.
Wealth managers are missing a trick on Open Banking
If wealth managers have considered Open Banking at all, it’s most likely been with data aggregation in mind. And while this is an important element, it’s only scratching the surface. Client onboarding, payments, product development and even tax returns are all areas in which Open Banking can help wealth managers cut costs, boost revenue and efficiency.
Streamline your business for cost reduction
Moneyhub’s technology has been used to combine internal data with external sources, which has had a transformational impact on customer onboarding, improving AML and KYC requirements and substantially reducing suitability checking costs.
Streamlining data-heavy processes in this way offers a huge advantage in an industry where inorganic growth through mergers and acquisitions is common and often results in convoluted IT architecture and business processes.
Frictionless payments
Payments are another area where Open Banking can reduce cost and improve efficiency: Failed direct debits, the inability to check if clients are in-funds and the need to access cash are significantly improved by adopting payment initiation services that can sweep funds simply and cheaply with customer-consent driven mechanisms.
Improved client reporting
Another point of differentiation for Open Banking is being able to tag income and expenditure accurately. And this is not just for retail spending but also for business expenses, and for helping to compile tax returns with an interface to HMRC’s Making Tax Digital initiative.
All this enables improved client reporting, offering them access to a net worth statement aggregating their assets and liabilities.
Offer even better financial advice
Open Banking and Open Finance can also change the script for financial advice. A fundamental principle of Open Banking is that consumers can leverage their data for their own benefit; they are in charge of what they share and with whom, including their advisers. And the more data they share the better the advice they can receive.
(A holistic picture of a client’s finances can only be fully monitored if an Open Finance provider can connect to the full spectrum of financial services—including investment platforms and pension assets, savings, loans and mortgage accounts—and not just PSD2 bank accounts. This is where Moneyhub comes into its own as the premier Open Finance provider.)
Develop products your clients really want
Being able to identify the assets and funds held by clients, on and off a firm’s platform, enables whole new levels of insight and product development.
For example, in an era of growing public concern about climate change, Open Finance can help clients analyse how green their lifestyle is with expenditure analysis tools. Linking personal behaviours to carbon footprints and sustainable investment is an example of the hyper-personalised customer experience available and is a service Moneyhub is proud to offer to our clients through partnerships with fintech pioneers Sugi and Connect Earth.
How to thrive in a post-Covid world
Wealth management is a sink-or-swim business. The constant pressure of fee compression and intense competition has made managers an adaptable bunch.
And for wealth managers seeking to thrive in a post-Covid world, Morgan Stanley and Oliver Wyman suggest the following three ingredients for success: doubling down on technology investments, cutting costs and creating differentiated products.
Open Banking paves the exciting road ahead for wealth managers
Open Banking, the paradigm-shifting data-sharing technology that has spurred a revolution in the way financial services are provided and by whom, enables wealth managers to deliver on the full triad.
The time is now for wealth managers to get onboard with Open Banking and seek out expert partners, such as Moneyhub, for the exciting road ahead.
But Open Banking is just the start!
Whilst Open Banking is important, the breadth of data and the depth of value that can be derived to the benefit of the customer and the firm, is not yet widely appreciated. Open Banking is a starting point for Open Finance, which is in turn only part of a wider Open Data movement that is transforming how we think, behave and act.
“Client onboarding, payments, product development and even tax returns are all areas in which Open Banking can help wealth managers cut costs, boost revenue and efficiency.”
Open Data in sixty seconds
Author
Vaughan Jenkins
Vaughan is an experienced Sales Director with senior industry experience in financial services, especially the life and pensions, asset management and wealth sectors. He co-authored ‘The Insurtech Book’ and has worked as an associate and consultant to a number of businesses.