Speaking at the Wealth Managers Association Fintech Conference on 7th September, James Alexander, associate director of the global strategy group at KPMG, claimed that in the near future computers may be able to analyse spending habits and internet searches to predict a client’s needs.
“There’s a story that’s been going around for years that [data from a supermarket loyalty card] can tell when somebody’s pregnant before they [themselves are aware]. That is a true story,” James insisted.
“It’s predicting and knowing what your client’s going to do and then knowing what the client wants before the client does.
“[It means] being able to phone up the client and then saying: ‘I know you were thinking about moving house, would you like to come in and have a chat about a mortgage?’”
James suggested that this technology could exist within the next few years.
Though an audience member voiced concerns over the implications for client privacy, Warren Mead, partner and global co-head of fintech at KPMG, was quick to reassure attendees.
“There are some stats around the demographics … and when you get to younger folks, they’ve actually already given away a lot of this data … without a return of value.
“If you think about all the future intent data that you put on Facebook or Twitter [showing that] you’re interested in going on a skiing holiday, that’s all out there.
“So you’re right to be concerned, but actually I think the key is you have to demonstrate you’re getting value for what you’re giving away and then people are more comfortable with it.”
Fintech regulation
During the conference, the Financial Conduct Authority (FCA) came under fire for the inadequacy of its regulatory sandbox.
Andy Sutherland, managing director of advisory services at The Consulting Consortium, alleged that the FCA’s Project Innovate did not demonstrate enough of a technological understanding.
“If you get under that and go and talk internally, I think people are really questioning what is it that we’re doing in here, because I don’t think they’ve got a particularly deep [technological] knowledge and experience across their business.
“…You’ve got a regulator who doesn’t quite get it yet, but they’ll get it when you get it wrong and they’ll understand it at that point.”
Nevertheless, Robbie Constance, partner at RPC, admitted that this lack of knowledge was not just limited to the FCA.
“Certainly the current benign regulatory environment [and] the pressure from the Treasury is bringing through a lot of smaller firms. A lot of them are doing similar things and there’s got to be a risk that not all of them can survive and succeed.
“…There’s always a risk [with] start-ups that are tech focused, [as] they’re always very light on legal and compliance and are being hurried by the regulator. And I think that is creating challenges.”
Mis-selling
In a discussion as to whether robo-advice could become a reality, the co-founder and CEO of investment adviser platform MoneyFarm suggested that mis-selling was easier to prevent in an automated service than via human interaction.
Giovanni Daprà argued that firms that specialise in robo-advice could dedicate their time towards perfecting its services and making the system more robust.
“I think that as a business, we live on the advice we give to the customer and so it’s super critical that we get it right.
“All in all I think [robo-advice is] much [easier for] an organisation to manage than a network of 2,000 [independent financial advisers] personally.”
Dr Joseph Hine, strategic adviser at software specialist Crealogix, added: “I would agree entirely, but it’s a case of replacing one sort of risk with another sort of risk.
“But at least the risk in your business you can really concentrate on producing it very much, whereas [for] the people with risk in the wider environment [it] is very, very hard to nail down.”
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