Connectivity 2022: Making integration happen

It seems crazy to think that in the third decade of the 21st century, with technology advancing in leaps and bounds, still very few pieces of kit in financial advisers’ back offices talk to each other in a constructive way that enables data to be passed seamlessly and accurately from one to the other.

This lack of connectivity not only makes for inefficient, time-consuming and more costly operations, it also increases risk to businesses.

The frustration is increased when an automated process has to be interrupted and requires manual intervention to take data from one stage to the next.

It is time this changed, and the environment is such now that it must.

In 2022 financial advice firms should have interconnecting systems that automatically process data and, in doing so, provide useful information that can be used to improve what firms do and how they do it and grow their revenues.

Such connectivity can create business efficiencies, reduce costs and, importantly, improve service levels to clients, an area about to move further into the spotlight as a result of the Consumer Duty regulations on which the FCA is currently consulting.

Integration between as many product and service suppliers as possible – product providers, platforms and adviser software systems – in respect of the processes that are key for financial advice firms is an obvious first efficiency to achieve.

Now, this makes the UK financial services industry sound extremely inefficient and, to a large extent, it is, but let me provide some context to the situation. First, there are many more pieces of kit now available that require integration. Second, there are some great adviser software systems that have been doing sterling work over the years to integrate their tech on a one-to-one basis with others in the market, and the introduction of APIs (application programming interfaces) has accelerated that capability. There is no doubt that financial advisers’ lives would be a lot harder if this hadn’t been happening.

For financial advisers, an individual integration can resolve the connectivity issue for one system, but they are likely to be using numerous providers and platforms, in which case point-to-point integration is impractical for all of them.

What’s to be done?

There are two clear ways around the issue. One is for financial advice firms to use an end-to-end system from a single supplier within their business.

The other option is for there to be a centralised integration service, enabling every provider and platform connected to the service to integrate once and to then be able to connect with every other firm on that central hub in respect of those key services.

Financial advisers benefit from this hub approach because every platform and provider can connect to deliver the data they need, allowing them to more easily, for example, research, undertake client reviews and get paid. In addition, their staff are happier as they can focus on the tasks that add value to the client proposition, which provides greater job satisfaction, and they can help the business grow.

The hub approach also provides the opportunity for companies to more easily connect with other, and new, trading partners. This provides financial advice firms with greater options.

For providers, platforms and adviser software system providers, linking to a hub incurs one set of integration costs, and maintenance and updates are carried out centrally, saving resource and IT costs, which can be used elsewhere in the business.

Changed environment 2022

This year, there is no doubt that digitisation is going to have an increasing impact on the financial services market. More tech-savvy consumers and the development of technology-driven hybrid advice services, for example, mean industry participants across the board – product providers, platforms and advisers – will be looking at how they interact with clients and how they can improve their operational efficiencies. How to connect better, bring in data faster and improve the efficiencies of their client service will be key focuses.

Certainly, for financial advice firms looking to operate a hybrid business, where they may offer traditional advice for high-net-worth clients and a more automated, online service for other clients, it will be essential to have joined-up processes.

Consequently, 2022 will be the year when connectivity rises much higher on the agenda for financial services business leaders.

We worked with The Lang Cat to produce a white paper on this issue, A Disconnected World: The Advisers Reality, which provides a unique insight into the inner workings and systems of adviser firms.

This article was originally published by Citywire, available here.