Written by Adam Jones, Guest Blogger on Friday 29 July 2016
D2C platforms have changed a lot in the last ten years.
Well, that was the premise I started with when I began researching this blog. As part of Altus’ tenth birthday celebrations, I wondered what might be the best way to reflect on the D2C investment market. I could have spoken to some product providers, or had a look at the tech people were using, but instead I just Googled it. After all, 2006 was also the year where Google was added as a verb to the Oxford English Dictionary.
My search soon led me to the Wayback Machine (the global internet archive). I undertook a complex scientific selection process (i.e. I picked three platforms at random) and had a poke about their websites to see what I would have been offered as a customer in 2006.
I was presented with a range of functionality. I could open an ISA or a SIPP. I could buy unitised funds or exchange traded instruments online. There were some investment research tools, and fund fact sheets which told me about the things I would be buying. There were even some multi-manager solutions and passive options available to me if I didn’t want active funds.
So let’s roll the clocks forward to 2016. With the weight of ten years of innovation and improvement behind them, what are these sites offering me today?
Well this is where my opening hypothesis falls apart slightly. I am still being offered ISA’s and SIPP’s. I can still buy unitised funds or exchange traded instruments online. There were some investment research tools, and fund fact sheets which told me about the things I would be buying, and there were even some multi manager solutions and passive options available to me if I didn’t want active funds.
But of course, the platform industry is more evolved, and things have changed. Importantly though, it isn’t what they do which has changed, so much as the way they do it.
User Centric Design
We have seen a focus on user centric design in the way websites are constructed, trying to pull away from the purely transactional interfaces of a decade ago. Incremental usability improvements have been introduced and key journeys have been reconstructed. We will see this continue as many approaches (originally taken from agile methodologies and UX design) are brought into innovation labs at leading financial services firms. Firms have been using participatory design, customer testing and ethnographic research to continually develop and improve their client engagement.
We are also seeing the emergence of robo-advice and other customer support tools in the web interfaces which are helping to guide clients to solutions which are appropriate for them. The emergence of bigger brands (notably high street banks) offering robo-advice for mass market consumers is the next likely advancement here, and would be a game changer in terms of client acquisition.
Robo-advice is in fact the latest incarnation of a gradual seam of change which has been taking place over the last decade; product simplification. It has resulted in margined trading, FX and CFDs no longer taking pole position on the front page of D2C wealth websites as they were ten years ago. Instead we are seeing core ranges of risk rated funds at reasonable prices with the complexities of a fuller open architecture fund range often being hidden from view.
Sitting across this development is a recognition that wealth platforms are only ever one aspect of the financial ecosystem a customer interacts with. The concept of wealth solutions interacting with other product lines from multiple providers is something which has begun to gain traction. Independent aggregation services already exist in the market (see moneyhub and MoneyDashboard for two examples) and the advent of PSD II will only serve to make this aggregation easier. When big brands who offer multiple business lines begin to operate as effective hubs of aggregation and multiple service lines, customers will become increasingly sticky.
On balance, what I think we have seen in the wealth sector is a slow realisation by the industry that it is the C in D2C which really matters. There has been a shift from a focus on back end technology to front end client engagement. This has driven an evolution in how services are presented to clients which has opened services up to a wider range of clients. We have seen the industry move from offering complex functionality for hobbyists to simplified financial options for the mass market.
There is still some way to go in the space, but leaders like Hargreaves will sit alongside major brands in developing propositions over the next ten years that put client needs at the heart of what they do while those that don’t will be relegated to the depths of the Wayback Machine.