Bot Wars Will Shape the Future of Finance
- By Lachlan Colquhoun
- January 30, 2023
Australia’s Financial Services Minister Stephen Jones took the long-awaited Quality of Advice Review away with him for Christmas reading. But already, the industry is responding by marshaling new armies of bots as the industry transforms.
Insignia Financial is the latest asset manager to turn to automation as a solution that ticks the boxes of cost, scale and compliance and furthers the company’s ambitions to be a dominant player.
The company has recently gone through some twists and turns and has only emerged recently with its new name after shedding various identities.
What came to Australia in 1846 as the Independent Order of Odd Fellows has been a mutual society called IOOF. Then it swallowed ANZ’s retirement business and MLC, formerly the asset management jewel in NAB’s crown.
Along the way, the company copped a drubbing before the Royal Commission. So it is hardly a surprise to see it rebrand, choosing the new name Insignia only last year.
This is relevant because, as a new brand, Insignia needs a unique value proposition and a new way to engage customers if it is to have any kind of future. There are a lot of legacies to shed, and automation presents a critical part of the company’s transformation.
Hours saved
So far, Insignia says its digital workforce has saved tens of thousands of hours of work, improving efficiency, accuracy and services. The company has implemented Optimus, a platform created by vendor Automation Anywhere.
“Designed to accelerate business transformation, Insignia Financial successfully scaled its automation program, saving an average of 15,000 hours per month in terms of full-time employee work hours,” the company said.
Its digital workers are “intelligent software bots” that automate processes to achieve efficiencies across business units ranging from Finance to Operations to Human Resources. They do work equivalent to more than 100 full-time workers at one-tenth of the human cost.
“Insignia Financial successfully scaled its automation program, saving an average of 15,000 hours per month in terms of full-time employee work hours”
This cost element is vitally important in the world of financial advice. Australia is about to be hit by a tsunami of retirees taking lump sums from their superannuation or pension schemes. Yet, only 16% of Australians access advice, primarily because it is too expensive.
The business imperative for the industry is that unless they can get the cost of advice down, people won’t engage with them, and they’ll never achieve scale. Enter the army of bots to help them accomplish that and restore their reputation for impartiality and transparency, which was eroded by the Royal Commission revelations.
Phoenixes from Ashes
Insignia isn’t the only financial services firm recruiting bots. Research company MYMAVINS recently completed some research on attitudes to retirement for major fund manager Fidelity Investments. Automation and technology were front and center as the researchers released the report.
Jason Andriessen, a consulting partner at MYMAVINS, forecasted that the Big Four banks — who have been in a gradual process of exiting the financial advice and superannuation space over the last five years — would be back into the sector when the Quality of Advice Review had been digested, and their strategies would be predominantly digital.
Andriessen said that while he didn’t foresee ‘traditional financial planning people in Toyota Camrys’ visiting people in their homes to sell products, he believed the banks were watching developments closely and likely to re-enter the market for retirement advice with a model that would be ‘digital everything.’ “I don’t think the banks ever had any intention of leaving (superannuation),” he added.
The significant superannuation funds were also waiting for the outcome of the Review and were “armed and ready” to enter the advice market, also with data-driven products which leveraged automation, Andriessen observed. They would be back in super “like phoenixes rising from the Ashes,” he added.
“The missing link is the regulatory environment,” Andriessen continued. “The super funds know their members intimately, and they’re ready to reach out to them with sensible advice.” The advice model, he predicted, would be low-cost, scalable and delivered digitally.
Fidelity’s head of client solutions and retirement, Richard Dinham, also said the company was looking to ‘innovate’ in the retirement market.
“There are a few things in the pipeline that will help advice providers and superfunds give better solutions,” said Dinham. “I think we’ll see all sorts of innovation here. Everyone is working on something.”
You can be sure that in the vanguard of this innovation will be fresh armies of bots fighting for market share in the increasingly attractive market for retirement solutions.
Lachlan Colquhoun is the Australia and New Zealand correspondent for CDOTrends and the NextGenConnectivity editor. He remains fascinated with how businesses reinvent themselves through digital technology to solve existing issues and change their entire business models. You can reach him at [email protected].
Image credit: iStockphoto/charles taylor