This year, captains of the wealth industry continued the rumble in the jungle over director independence and default superannuation arrangements. Regulators continued to avoid any discussion of a bubble in favour of ‘froth’. Stephen Sedgwick fired some subtle early shots on the relationship between remuneration and culture, days ahead of the release of his report.
Amid all this, one issue that stood tall was relationship Australia’s financial system has with customers, how we can engage them and build trust into these relationships. Bob Contri, Deloitte’s Global Financial Services Leader, noted Australia's impressive focus on the customer stands in front of what he has witnessed globally.
ASIC’s Chair, Greg Medcraft, flagged a driver for this focus. He noted that "the best asset banks have is the trust of their customers". However he also highlighted that an array of trust indices are showing the crowd to be a powerful arbiter of poor conduct. It is easy and over-simplistic to point at financial advice scandals as the sole concern. Indeed, an array of sessions highlighted how financial advice may actually hold the key to rebuilding customer trust in financial institutions.
A panel including Antony Cahill from NAB, Greg Symons from Society One and Deloitte Partner Jenny Wilson dug deep on what drives the kind of trust that matters in financial services. Contrary to some expectations, Deloitte research has shown a positive correlation between the frequency of financial advice interactions and increasing trust in banks.
So while the a selection of too many individuals and events within the advice industry have tarnished the overall reputation, what we can discern from this research is that customers still value interactions that can help them make sense of the incredibly important and complex issues surrounding our financial futures.
Matt Comyn spoke with eloquence and zeal of CBA’s work with behavioural designers to uncover how they can support financial wellbeing in a digital age. Their studies have shown financial stress to be more detrimental to our cognitive ability than sleep deprivation. They are now actively experimenting through mobile labs on ways digital technologies can help to mitigate these issues.
In sessions on the future of wealth and how we spend our super, a notable theme was the complexity attached to forecasting longevity risks as an industry when the available data is insufficient. For the average consumer, the difficulties in accessing the data and insights to understanding the complex considerations of future spending needs can be deeply more emotional and stressful.
Digital solutions can alleviate some of these pressures. Through digital advice tools, institutions can offer a broader customer demographic an increasing volume of interactions to help understand and plan out their financial future. They are tailored to the customers’ situation and needs, driven objectively by algorithms based on the customers’ data. Technology stalls at the Summit were heaving with B2B digital advice solutions and many attendees spoke of their early adoption of such tools.
As James Eyers has noted elsewhere, open banking in the UK has helped accelerate these shifts, putting control of and engagement with transactional data into the hands of the customers. This is a strategic direction that Australia must follow fast.
In an earlier session, two heads of retail banking indicated this to be likely. Westpac’s George Frazis. Stated that banks should take measured steps to open data and maintain levels of customer trust with their money & data says. ANZ’s Catriona Noble agreed, noting that “open data in financial services is inevitable”.
Deloitte’s US Wealth Practice Leader, Gauthier Vincent, uncovered the new financial advice operating models that enable advice to be delivered to more consumers with improved margins than traditional advice models. He reflected on a recent conversation with the Head of a major US Wealth institution, who noted that “10 years ago, it paid to be a smart follower. However the pace of change means we can no longer afford to wait".
Australian consumers need assistance in understanding the pathways to financial security and eliminating financial distress. The technology and design techniques to deliver this exists. The winners will be the fast movers that support customers along this journey.