So, Shaun, what is a tech ecosystem and can you give us an example of one that works well?
I would describe a tech ecosystem as “an interdependent network of products and services that are interconnected to solve problems within an industry”. I discovered a brilliant example just before the pandemic, when I was planning a trip New York. I had booked my flights through British Airways’ website, where I was offered – and selected – other important services, such as hotels, transport, activities and more. That integration was useful enough – but planning became a great experience when I began to sketch out my itinerary with TripIt. This app automatically built out my schedule with the flights, hotel and planned activities scraped faultlessly from my confirmation emails. An in-app map was available to help me around in New York and to suggest cafés and restaurants on my route. This was one of the best ecosystems I have experienced.
What can the financial world learn from TripIt and similar experiences?
Each product or service within the ecosystem is important but this value significantly increases when it is used in conjunction with other products or services within the ecosystem. Let’s look at financial advice, which, for argument’s sake roughly follows six steps:
1. Engagement – education and identifying needs and objectives
2. Fact finding – gathering information
3. Research and analysis – strategy writing, fund analysis, modelling
4. Advice presentation – report writing
5. Advice fulfillment
6. Ongoing service and relationship
Each of these steps potentially requires the use of multiple products or services to complete, each one bringing value to the advice process. But if they are not properly integrated the process can be inefficient, data can be isolated, and this can result in a poor user experience. A recent report by The Lang Cat consultancy for Origo revealed firms used five systems on average in the process of giving advice, building portfolios and managing clients. They also found that in a typical new business journey, client details are rekeyed at least three times.
What do good tech ecosystems bring to financial advice?
I would summarise this in three points. They (a) improve efficiency in the advice process, (b) allow access to multiple sources of data, and (c) make use of multiple products and services to provide a better customer journey.
Okay, tell us a bit more about the sort of ecosystem Turo can operate in.
Like TripIt, Turo utilises many API integrations that allows the user to reap the benefits of multiple products or services without leaving the Turo interface.
- ATR questionnaires, like Dynamic Planner or A2Risk
- Investment research tools, like MorningStar
- Product quoting technology, like IRESS
- Product support software – like Intercom
- Open Banking apps, such as Moneyhub
You’re a “Head of Product”, Shaun – tell us what the benefits are of using an ecosystem to develop a tech product
First, it allows you to focus on your product’s value. That means you can concentrate on your product’s core activities and not have to worry too much about other areas because you know that other products or services in the ecosystem can provide that value.
Second, you can innovate quickly to offer a more complex solution. Each product of the ecosystem is delivering a small piece of value but when these are united a complex, market leading, solution can emerge.
Third comes the cost benefit. Creating a new feature requires planning, designing, testing, engineering, a feature launch and marketing. By integrating with another product or service, you can save a lot of time and cost because they will have those activities covered.
Fourth, an ecosystem can increase the time the user spends in your product. By allowing the user to access other products through your product’s user interface, they spend more time interacting with your product and start to create habits and routines.
Providing you already have achieved product market fit, the above benefits can help you grow and compete more effectively.
Where is all this heading? What are the possibilities of ecosystems in the financial advice industry?
Digital transformation will be at the forefront of everybody’s mind after the lockdown. For example, financial advisers were not able to drive to their clients’ houses and fill in fact finds for weeks on end. But many learnt to carry out fact finds using technology. This will become the new normal.
There’s still huge room for improvement in financial advice when an adviser can touch five or more systems and still need to re-key data. I believe there will be shift from infrequent “macro advice”, assisted by advisers and triggered by life events to small, frequent “micro advice” consumed as part of our everyday financial good-health, and delivered as an integrated part of our daily financial lives. This could be achieved through social media and voice-activated assistants such as Alexa . Artificial intelligence will also be a game changer.