In Ray’s review of 2016, he highlighted some key events and topics that have not only impacted the FinTech landscape this year, but also served to provide some interesting new opportunities and innovations for 2017 and beyond. These topics were diverse and included the DOL Fiduciary Rule, Block Chain and Robo Advisors. In this post, I want to provide you with some insight and predictions for the FinTech space in 2017 based on the trends we saw in 2016.
Robotic Process Automation
As we discussed in last year’s blog post, the T+2 Settlement initiative (targeted for a Q3 2017 live date) will put pressure on brokerage operations to become more efficient in the settlement, reconciliation, and exception handling processes. This will create an increased need for multiple types of automation solutions. At IFS, we have great automation solutions that can handle any process. But, we also realize that there could be another option for some of the simpler automation needs, for processes that are more repetitive and don’t have a lot of complexities or variances.
In these scenarios, robotic process automation (RPA) may be a cost-effective option to automate the mundane exception management tasks. RPA provides the ability to record each step of the exception process and play it back repeatedly as you need to resolve each exception. Utilizing this type of automation does come with some risks. For example, a change in user interface field placement can impact the record/playback automation script. But, when used correctly, it can free up your operations staff to work on the more challenging exceptions or focus attention on new, value-added opportunities within your firm.
If there was one topic that dominated financial services headlines more than any other, it was the DOL Fiduciary Rule. We all know that it will change the landscape, and whether the current rule survives the onslaught of opposition (both public and political) remains to be seen. But, at the heart of the matter, the industry recognizes the need for a uniform fiduciary standard. In a recent article from ThinkAdvisor, it was reported that a uniform fiduciary standard continues to be at the top of SIFMA’s advocacy priorities in 2017.
This concept isn’t going away. And we believe it will lead towards advances in data aggregation that could be critical to empowering advisors with the full complement of financial history for their clients. If your advisors, RIA’s or financial consultants need to provide a full fiduciary recommendation, they will need to have access to all of the necessary accounts. This will go beyond banking and credit card accounts to include wealth management accounts. Vendors that can provide this trifecta will certainly add value for you and increase your advisor workspace capabilities. We have spoken with some data aggregators over the past year and see many opportunities to provide value-added integration solutions that would be easy, intuitive and actionable.
Full Fiduciary View
The last topic I wanted to discuss also relates to the DOL impacts. As we look across the various financial services environment there are certain areas that sometimes get overlooked. We all focus our attention on the primary brokerage/wealth space and consider the impacts of that core business. But, this new fiduciary standard will require the advisor to become more active in managing the outside investment assets as well – things like annuities, life insurance products, and direct mutual fund business. The days of allowing your customer to work directly with one of these providers without you knowing it are going to come to an end.
If you are truly going to act in a fiduciary capacity and be held accountable to a standard, your advisors need to be actively involved in each piece of the investment profile. So what does that mean for you and for us within the FinTech environment? It means that we have a tremendous opportunity to bring cross-platform visibility to the advisor, and ultimately provide automation for products that were never in the discussion before. Most firms already have systems and automation in place for initial trading or acquisition of these outside products. But what about ongoing maintenance? As an industry, and certainly as a valuable partner for you, we feel it is going to be crucial to provide a platform that will allow the advisor the ability to work with the customer and maintain their outside assets as easily as they can maintain their captive assets within the broker/dealer. In the coming year we will launch Annuva, an annuity maintenance solution that will put the power of the IFS Automation Platform to work and drive automation that few products have.
Regulation breeds fear, but it also breeds tremendous opportunity. I hope that through this blog you recognize that we are ready to help you manage these changes and bring value to your organization. If you’re interested in learning how IFS can help your firm in 2017, click the button below to get in touch! We’d love to hear about the challenges you’ll face in the new year.