We’re living through a fundamental shift in the UK around the way people control their long-term savings and plan for their retirement.
We see new expectations raised and created by the technology now embedded in our lives, and a dramatic shift in attitudes around finances, careers and work-life balance.
We’re excited about this change – and about how we can help firms and organisations succeed.
To help us best meet the needs of our clients and their customers, we’ve reviewed the market and laid out our approach.
The market: what’s happened and where is it going?
Change across sectors
Other industries have fast outpaced Financial Services with the way they engage and serve customers using technology. We’ve seen how sectors like retail and travel have changed: £1 in every £5 is spent online. And four in five people book their holidays online, rather than in-store or over the phone. These industries now use technology as a core part of doing business, seeing it transform their customer journeys and supply chains.
Change in Financial Services is less uniform. The way we make payments is radically different to how it was just five years ago. And the way payments and insurance businesses use technology is leading the charge. But organisations in planning, long-term savings and investments are yet to embrace new consumer attitudes and advances in technology.
Although slow, change is happening. The FCA is encouraging the use of technology, rather than inhibiting it: its regular TechSprints; recommendations in its latest Retirement Outcome Review papers; and the Sandbox, where businesses can test out new products with real people.
Complex relationships with work, finances and retirement
This disparity is only natural. We have an undeniably more complex relationship with our long-term finances than with every day transactions. And whether it’s personal loans or multiple pension pots taken from multiple companies, we’re past the days of having a single final salary pension from one employer.
The state – and many businesses – no longer have a paternalistic attitude towards savings provisions. Instead, they’re willing to give people the access and control to shape their own finances. 2015’s pensions freedoms and the upcoming pensions dashboard project will let people manage their finances – rather than solely relying on their employer or government. Employers also have better defined contribution plan provisions, and with the addition of auto-enrolment, 10 million more people are saving towards their futures.
People aren’t just being pushed into taking more control. There’s a definite ‘pull’ going on, with more people moving away from businesses and the state for their financial security. The gig economy has let people run their lives in a new way, creating security and predictability around their security themselves.
The standard 9-5 is being shaken up. People have ‘side hustles’ in addition to their full-time roles, and many look to the gig economy for supplementing their income. A survey by ING found that 54% of people in Britain think they will need to remain in paid work during retirement, while 58% of those will look to the gig economy for work.
Despite the state pension age getting later and life expectancy getting longer, millennials are planning on retiring earlier. Whether it’s following the Financial Independence, Retire Early (FIRE) movement, or saving, investing and working on side projects, their financial lives are increasingly complex.
With these huge changes to income streams, retirement expectations and pensions, people need financial advice and guidance more than ever. And many want more control over their finances and future too. But basic education is lacking: 34% of workers have a workplace pension but don’t know anything about it, and 79% of adults wished they’d learnt about finances at school. At the same time, the number of organisations offering financial education to employees has fallen from 41% in 2017 to 36% in 2018.
The advice gap has never been greater or more dangerous – particularly for those approaching retirement. There are 18.2 million people in the UK who might have a need for advice but haven’t yet taken it – amounting to 36% of the population. Whether it’s due to high advice costs or not meeting advisers’ criteria, these people are calling out for help. Otherwise, they risk making the wrong decisions and potentially running out of money in retirement.
New approaches using technology
The electric combination of rising customer expectations, the need for advice and an influx of smart technology is creating a catalyst for change in the industry.
From data and analytics to payments and ID&V, technology can make a difference. APIs make complex calculations accessible to anyone, while tools and widgets improve communications and expectations for consumers.
Data is making far-fetched ideas a reality. We all know more about our customers, our competitors and our market than ever before. The ability to access and interpret an individual’s data lets us produce personalised services and information that people can act on.
The combination of heightened data and analytics skills plus smart technology has created an unprecedented ability to support people with their decision making. We can build useful tools using powerful calculations, that take one person’s situation and give them the right information and guidance to make the best decision.
EV Elements – our tools, videos and APIs – are individual components that businesses can simply plug into existing systems, processes and websites. As businesses have different digital requirements and priorities, EV Elements let them piece together parts of the journey at their own pace and in total control. They can achieve quick wins and meet urgent customer demands.
Using EV Elements, businesses can take a new approach to consumer engagement. Whether it’s showing personalised videos to analysing and processing personal data in real-time, there’s an opportunity to radically transform customer experience. You can see our working example of this: Fin, at www.whenwillmypensionrunout.com.
Creating an open future
With the arrival of open banking and open pensions (through the pension dashboard), Financial Services is turning to technology to knock down barriers. These new approaches are challenging old business models. The advances in technology and attitudes could see everything in Financial Services open up: from open investments to open factfinds. This would make managing finances a more seamless experience for customers, while giving providers the right environment to innovate.
However, a sharing culture will put more emphasis on data security and trust. Firms will be judged on their ability to protect people’s personal information, while betrayal of this trust could have serious consequences. An Accenture study found that companies who lose trust see their Competitive Agility Index score decline by two points – which has a huge impact on revenue and profits.
In addition, there’s a shift in importance from product to customer. Customer needs are starting to shape strategies, technology use and product development – rather than businesses simply launching services and products into the market. Technology will both enable this, and significantly reduce marginal costs. These reductions will be passed onto the end consumer, ensuring more people get the help they need. Vulnerable people will benefit from this too: they must not be forgotten as the speed of progress accelerates.
How we’re responding to change
Defining success in this new emerging market
This new emerging market needs confident and ambitious leaders to help businesses make the transformation a success. At EValue, we’re taking on that role. We see big opportunities for the market to progress, and we’re addressing them in our offerings:
- EValue Digital Advice and Guidance Platform: an end-to-end process for digital advice and guidance
- One Financial Adviser: a fully compliant, fully automated online advice platform
- EV Elements: a selection of tools, APIs, widgets and personalised videos to use in existing systems and processes
- Insight: an asset model with robust, realistic forecasting abilities
We’re launching a fully regulated and 100% digital advice platform for the workplace: One Financial Adviser. This summer, people making at-retirement decisions can use this automated, compliant service to get the advice they need but possibly cannot afford traditionally. We’ve allocated over £5m to the project, to help battle the lack of innovation and widening advice gap.
The technology behind this is our Digital Advice and Guidance Platform. We’re proud to launch this platform to the market, after having seen the huge benefits it brings to our existing clients’ customers. Digital Advice and Guidance Platform has helped a client reduce the time it takes for people to get in-branch savings and investment advice by 90%.
To support the Digital Advice and Guidance Platform, we’re founding the EV Ecosystem: a network of top service and technology providers working together. Together, we’ll create end-to-end systems and solutions for organisations wanting to give their customers digital advice and guidance.
The impact of this for our customers is unrivalled: a 50% increase in customer engagement, a 90% productivity improvement for advice businesses, and addressing the advice and guidance needs of up to 40% of the UK’s population.
We’re also expanding the services of Insight, our industry-leading asset model. As well as using its realistic forecasting capabilities to help with investment choices, it will now begin to address the market need for centralised retirement propositions and the FCA’s investment pathways.
Accelerated innovation with EValue Labs
We believe collaboration is key to success in this changing market. To help bring together the best products, services, technology and innovators in the industry, we’re launching a series of events: EValue Labs.
Combining our powerful APIs, other EV Elements and capabilities in the EValue Developer Portal with services and technology from top providers, people will come together to solve industry challenges, push the standard of innovation and create ground-breaking new products.
To find out more about our approach, events or offerings, get in touch on 01635 881180 or firstname.lastname@example.org