By Andrew Holley, founding partner, Holley Holland
Many people treat their personal finances with a shrug of world-weary resignation. Annual updates chaotically filed, reviews sent by post that are out-of-date by the time they are opened; policies taken out that have long since expired. It’s a familiar but wholly dispiriting picture.
For most, the situation is further complicated by the need to interact with multiple providers, each of which manages certain aspects of their financial world. We recently ran a survey of more than 2,000 adults across the UK, which found that a significant 44% deal with three or more providers. Some respondents (7%) even said they needed to balance information from seven or more organisations to get a complete picture of their current financial status.
This is leading to fast-growing demand for a more integrated model, allowing individuals to call up a 360° view of their finances online in real-time. More than 40% of our sample said that having access to an online portal to view all their financial assets and liabilities in one place would help them plan and make better financial decisions, while fewer than 30% said it would not.
People today expect immediate access to consumer goods and services online. It is natural they would want the same with their personal finances. But is this kind of real-time view an achievable reality or simply just a pipe dream?
Delivering a Comprehensive View
In the past, many financial institutions have tried to provide customers with a single view of the portfolios they hold with their organisation. The issue is that the individual products which constitute these portfolios, from pensions to ISAs and from insurance policies to investments, are usually recorded and processed in separate computer systems and using different identification numbers within any given organisation. Typically this complex network of systems has been built up gradually over time, often through a process of merger and acquisition. The challenge therefore is somehow gluing all of these separate systems together and presenting the amalgamated results to the customer within a single online portal.
At Holley Holland, we believe the key will be enabling the provision of this information through a universal identification number, perhaps a national insurance or social security number. This should make it easy to collect data relating to a single customer; pull it together; transfer it to a single integrated database and present it within a single portal where the customer can view details of their latest financial position on-demand.
The rewards for any bank able to achieve it are potentially far-reaching. Being able to offer clients a 360 degree view of their personal finances would give banks a point of differentiation, and a service that their clients are likely to value. Customers might be tempted to ignore a marginal product differential and switch all of their products to one provider if, in return they were able to access their entire portfolio, on a browser in one place.
Of course, extending the single view within one institution to a coordinated cross-industry approach is a more daunting challenge. The technical barriers around unified customer numbers remain in place but in this scenario, the main obstacle is the need for collaboration between the big financial players.
Politically, it would not be viable to allow one organisation to become dominant and ‘own’ the aggregation of the data. Instead, an independent third party would need to be established that could be funded by the banks but at the same time manage the aggregation process around a set of data standards and customer identification like national insurance or social security numbers that are unique to each customer.
Security will inevitably be a much bigger stumbling point with this approach. Each bank would need to have an assured confidentiality agreement in place with the chosen aggregator, whose sole purpose would be to receive and manage the information provided by the banks.
There is clearly a growing appetite for this kind of initiative. In Israel for example, the Bank of Israel’s director of bank supervision David Zaken is pushing for regulation that requires all banks to compile an annual report of their customers’ assets, incomes, expenses and credit ratings
There are of course, positive precedents that have already been set here. The success of the CHAPS and Bacs payment systems in the UK show that it was in the interests of the banks to work with independent bodies that became clearing houses for cash. And we have seen successful examples of this kind of approach in other sectors, most notably the travel industry, where centralised product and content management and communication platforms have existed for years, pulling together data from hotels, airlines and booking services.
Several factors are now converging to make delivering the single real-time view a viable option. The technology exists to do it, customers and the banks themselves can increasingly see the benefits and regulatory bodies are now looking to bring in legislation designed to make the banking experience easier for the customer. Looking ahead, the signs are good. Perhaps we will now finally see the single real-time view become a reality. The days of searching high and low for the latest pension review or trying to work out how much you should transfer from your current account to your ISA may finally be coming to an end.