Greater integration and the effective use of client data will see platforms become advisers’ primary connection to a vast ecosystem of innovation, says Jenny Davidson, as she explores how the sector and its relationship with advisers could develop over the coming years...
New technology is already accelerating the digital evolution of the financial services industry.
Traditionally, platform providers have worked with their partners to offer new products and services to advisers, but this is changing. We must stop viewing innovation as the product and start talking about platforms as the gateway to a more connected world of digital technology.
Platforms are designed to help advisers with increasing capacity demands while managing their business and supporting their clients. With the current rate of change, they will evolve and connect advisers to a potentially unlimited ecosystem of digital services, such as pension dashboards and open banking and finance, through a single portal.
Ecosystems in nature function because each element works in harmony. If one connection falters, the entire community it supports can be impacted. Technology ecosystems are governed by the same principles, meaning greater integration between platforms and third parties is the only way to realise their full potential.
The platform market is already working hard to deliver new services and greater choice to clients by forming richer partnerships. We are currently working with Origo to deliver new platform integration services for advisers via its integration hub.
Of course, platform integration with third parties can present challenges. Like anything new, to begin with, it can be costly and time consuming. But it's a classic case of short-term pain for long term gain for a greater experience for the adviser and their clients.
To make platform integration work, providers must be able to share client data so the new services advisers can tap into areas personalised to their needs and connected to one another. We have already seen great success in this area by integrating our Investment Management Hub into Wrap. Limited client data is now available to the discretionary managers we partner with to help advisers achieve their clients' desired outcomes.
Managing client data
The rapid advancement of digital technology and widespread use of customer data across all aspects of our lives is making our world more connected. Platforms are no exception. But to give advisers access to an ecosystem of new products and services, providers must ensure they use and share the data that makes this possible responsibly.
The value of client data should never be underestimated. Mishandling it could compromise important relationships with third parties, cause long-term reputational damage and, since the introduction of the General Data Protection Regulation (GDPR), lead to significant financial penalties from the Information Commissioners Office (ICO).
We can expect the standards that govern platform providers working with third parties to become far more focused on data security. Links between platform providers will not be established without strict due diligence and clear request authentication and client permissions procedures.
This should not be viewed as a hurdle. A clear framework of rules and regulations will encourage sustainable long-term partnerships and make the solutions they connect customers to more appealing. Advisers are more likely to use new technology if they are confident their clients' data is safe.
Advisers today recognise the benefits of adopting new technology. According to our recent Adviser Quest research, nearly three quarters (71%) want the roll out of pensions dashboards to be a government priority. Platforms will be the central point in an ecosystem of digital services that can help advisers be more efficient and leverage client data responsibly to expand their offering. We are already seeing examples of adviser businesses using platform technology to offer their in-house investment solutions to other adviser firms.
The financial services industry as a whole is moving in this direction. By 2030, the connections between the services consumers and businesses use every day to manage their financial world will be frictionless. Platforms will ensure that the experience of advisers, and their clients, benefit from this evolution.
Jenny Davidson is head of platform investment proposition at Standard Life
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