One of the most exciting ways fintech is dramatically improving the industry is the ability for greater collaboration and integration between systems and software.
The biggest change in the past five years has been the rise of API technology, which has paved the way for much more effective integration between different technology platforms.
API or ‘application programming interface’, put simply, refers to what applications are made from – a combination of databases and business rules that communicate between software.
Essentially, APIs allow things like Microsoft Dynamics, XPLAN and Salesforce to all work seamlessly together in one advice business where previously each of those functions would have operated separately and required manual work to bring the information together.
For financial advisers, the time required to service clients is dramatically reduced by technology.
For example, the time for an adviser to do a paper-based application for insurers is several hours. With collaborative technology, multiple data and analysis solutions work together to produce the same application in a fraction of the time.
While this technology is game changing, the question for advisers is how their business adopts it.
Build, buy or borrow
While the big players in financial advice could feasibly develop their own platform that could handle all the functionary needs of advisers and clients, in reality the cost of developing and, more importantly, maintaining the platform simply isn’t viable.
With the speed at which the fintech industry is moving, by the time the technology is developed it will already be out of date. On top of that, it will require a dedicated team to ensure each element is updated and meeting compliance regulations.
Alternatively, financial services organisations can buy the APIs from individual providers and integrate them manually into their own platform.
While it will give you arguably more customisable options, the process of making these solutions work together is still a complex task.
Middleware needs to be written to connect the APIs together, which requires a developer.
The easiest, cheapest and most agile way to really take advantage of collaborative fintech is by utilising a platform that already offers integrated solutions.
It requires no technical development from the adviser’s end and will always be up-to-date. Best of all, the cost is significantly lower.
The challenges facing the industry
All signs point towards a much more collaborative and integrated future for financial services, and the advice sector is gradually moving towards a hybrid model where digital and face-to-face advice work together seamlessly.
Despite this, one of the greatest challenges to the adoption of collaborative technology is the unwillingness of solutions providers and financial practices to open their technology up for integration.
This largely stems from the traditional model where a company would control the end-to-end engagement with a client but, as clients increasingly demand one-stopshop service that provides value for money, solution providers are being forced to open their APIs or risk losing out completely.
The setup cost also presents a barrier for advice firms to adopt technology.
While adopting an integrated solution is relatively cheap, it’s still a cost that some see as unnecessary, not realising the benefit it provides in the long run.
Ultimately, collaborative tech represents the future for financial services and, like other fintech innovations, client demand is already winning out.
Richard Liverpool is head of sales and marketing at Ignition Wealth.
