Open Banking could drive down the cost of advice, participants at a recent roundtable hosted by Bravura Solutions Limited (Bravura) predicted.
The attendees, which included senior platform executives, workplace savings providers and financial advisers, believe the use of banking data would not only improve the standard of advice in the UK but improve access to it also.
Specifically, attendees believe customer spending data could be used to create more accurate cash flow plans and pre-populate the first few pages of fact finds, thereby lowering the cost of advice.
Making these vital tasks more efficient could make it more viable for advisers to service clients with smaller assets, the roundtable participants said.
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Their insight coincides with the launch of a white paper on Open Banking by Bravura, exploring how increased data sharing could also empower investors and nudge people to save more.
Open Banking may even bring access to financial advice to those who need it most – people in debt, the attendees said.
For example, services could be developed to help with debt management, using transactional data to closely analyse where spending could be reduced to pay off debts in a manageable fashion.
Nick Parsons, Global Chief Technology Officer at Bravura and chair of the roundtable, said:
“Open Banking has huge potential to drive efficiencies in the UK’s advice community. Speeding up key processes such as cash flow modelling and fact finds could not only significantly cut the cost of advice but open it up to large swathes of orphaned clients that were left uncatered for following the Retail Distribution Review.”
Sean Hawkins, Strategic Partnerships Manager at wrap platform Ascentric, said:
“If you make things more efficient, it makes it easier to reach people who might otherwise ignore their finances. For example, people leaving university with debts might simply think their finances are bad and ignore the issue. [Open Banking] makes advice more inclusive.”
As well as improving access to advice, Open Banking has the potential to have a similar impact on positive financial outcomes to Auto Enrolment, the group predicted.
At the moment, apps that prompt people to save may be doing so at times when it is inappropriate, such as when a person is low on funds.
But by using banking data, these apps could encourage people to save or invest at more appropriate times, such as when they have cash available.
Using data available from Open Banking, analysis could also be performed to show the return on capital for saving versus investing, the roundtable attendees said.
Finally, this level of data analysis could also help empower investors so they better understand their spending habits and analyse how they may change in retirement.
Chris Daems, director, Cervello Financial Planning, commented:
“We have clients where we have spoken to them as they are coming into retirement and they don’t know how much they are going to spend. Open Banking could truly test how much they are going to spend without them having to add it up every month.”