9 FinTech Lessons to deliver Digital Advice Model Success – Part A

Executing the Chosen Strategy, Excellently

As a close observer of this emerging market and, over the last two years, having worked with three digital start-ups – one generic financial planning, one ‘at retirement’ but wanting to diversify into other advice areas and one mortgage start up wanting to take advantage of opportunities that open banking brings – I wanted to share some things I have learned on the journey. These fall into two critical categories:

  • Part A – Executing the Chosen Strategy, Excellently
  • Part B – Driving Customer Volume to Build a Scale Business

I have split the post into two parts to make it more digestible. Today’s post will cover the first category.

Leadership teams in large organisations are normally good at figuring out what needs to be done strategically. I believe most have decided that pure robo advice isn’t getting traction in the UK and a hybrid model combining the best in digital (delivering both efficiency and significant risk control) along with human advisers (providing reassurance and professional support), albeit delivered remotely in some cases, is the way forward.

What follows are some observations on successful strategy execution because:

“Strategy Execution is the responsibility that makes or breaks executives” – Alan Branche and Sam Bodley-Scott, Implementation


“However beautiful the strategy, you should occasionally look at the results” – Sir Winston Churchill

 1. Target Operating Model

Once the target market, strategy and customer proposition are agreed, a high-level customer journey can be mapped. It may seem an obvious thing to say but those things need to be nailed down up front or the whole programme will drift. They need to be agreed, documented and locked down.

Eventually there may be multiple customer journeys with tributaries of happy and unhappy paths, but this high-level customer journey represents the value chain from which the Target Operating Model (technology, people and processes) can be sketched. It is important to have a sketch not only for stakeholder engagement (which is critical) but also to give early indications of the size of the task. This could include new technology (including third party software) and the integration of technologies, existing processes to be changed and new processes to be mapped and implications for organisational design, capability development and workforce planning.

This sketch is not an architecture diagram nor is it trying to be. That important diagram is best left to the Technology Architects. That said there will be very close working between the TOM team and the IT team including the Architects.

2. Third Party Software – “adopt not adapt” and API capabilities

I learned the first of these out of necessity many years ago when deploying new advice software for a regulatory drop-dead date. We had to adopt the ‘out of the box’ solution so we did.

Where time is somewhat less pressured large companies have tended, in the past, to want ‘bespoke solutions’ to meet their specific needs. Vendors keen to impress have tended to say ‘yes’ and this has led in some cases to software deployed that is so different from the core software that it is unable to automatically take upgrades which are nowadays ever more frequent. At best this leads to delays and more likely it will also have cost implications and eventually the software is often discarded.

When selecting software choose a solution that is highly configurable so that it can map to your work flows, advice policy, product set etc, etc without ditching the ‘adopt’ principle.

Related to this it is critical to ensure that any chosen third party can meet your company standards for Application Protocol Interfaces (APIs). Thankfully most companies have stopped trying to build everything themselves. Your TOM is likely to include a variety of internal and external technology solutions – digital front end, advice software, CRM and books and records platform to name but a few – and these standards dictate how both data and services can pass to and fro between them. Chosen third parties need to operate to these standards and this can be examined as part of an request for proposal (RFP) process.

3. RFP Best Practice

Software vendors are good at providing written responses to RFP documents as they do it all the time. In a recent RFP the high to low score margin across all vendors was less than 15% for written response alone.

Adopting a more rigorous approach including demos, site visits, vendor suitability assessments, model office insights as well as, importantly, prototyping (we asked vendors to prove their API capability and we also asked them to build something for us) provided clear blue water. The margins for some of these were >33%, >36% and >54%.

Although it is critical to gather good requirements up front to use for vendor assessment it is useful also to document in the RFP that you are going to re state requirements at the end of the process as you are bound to learn things along the way.

4. Automate all that you can for efficiency and risk management

(i) Business Process Management Software to enable Advisers to advise and nothing else

Business Process Management (BPM) is a business solution approach which views a business as a set of processes or workflows. BPM Software (BPMS) is software which enables businesses to model, implement, execute, monitor and optimize their processes and workflows to become more efficient and adapt to ever-changing environments. This allows companies to manage entire process life cycles by defining and maintaining best practices in their processes. Using BPMS one business has driven adviser productivity to 10 times the traditional levels as the BPMS directs all non-advice activity towards lower cost resource. This workflow software can deliver a digital customer record of all customer interaction (phone, email documents etc.) to create an excellent audit trail. The next logical step is to automate as much advice and non-advice activity as possible.

(ii) Digital front end (DFE) to gather fact find information

Many companies are trying this, balancing the need to gather rich data to give good advice against digital best practice which says “build with iPhones in mind” i.e. pages not too busy and not too many pages, so customers don’t abandon the process. Open banking has the potential to streamline this activity further (more on this in Part B).

Institutions with customer data can pre-populate the fact find to ‘show me that you know me’ and LV’s robo-adviser firm Wealth Wizards is developing a tool to include social media in the process of fact finding data about different pension pots. The company is developing a database with employers and related pension schemes, so it can “make some good educated guesses on what pension schemes a person may have been associated with” by looking at an individual’s LinkedIn profile.

(iii) Automated paraplanning & automated suitability

Suitability letters have been automated for simple advice, but these boundaries are being extended through more and more configuration. This is important from a risk perspective as automation delivers consistency. It also drives efficiency.

Calculating lifetime allowance and the tapering of annual allowance for high earners etc can be automated relieving paraplanners of some of their workload. Provided the models are tested and validated this again provides excellent risk control and efficiency.

Wealth Wizards and LV have used the above approach to deliver “start to finish retirement advice in less than two hours”.

(iv) Artificial Intelligence (AI) and Machine Learning (ML)

These will likely form part of the solution going forward but I don’t believe they will provide the whole solution. Rule one according to Machine Learning for Dummies is to identify the specific business problem you are trying to solve rather than jump on the ML bandwagon.

“Start with a problem that can be tied to a business outcome. But don’t get ahead of yourself. Make sure that you select a small problem where you can readily identify the data that you already have and the data sources that you can obtain”

5. Leadership

Successful transformational leadership requires huge collaboration. Recently when leading a TOM team, we worked very closely with Proposition, Digital, Model Office, Compliance, Distribution, Risk and others and pretty much hand in glove with Technology (including Technology Architecture), HR and Operations.

Leading this type of transformational delivery requires gravitas and clarity in high level communication (being able to put complex topics such as a programme plan, an RFP process or a Target Operating Model ‘on a page’) to ensure good executive stakeholder engagement as well as an eye for detail whether regarding requirements gathering or a review of a legal agreement.

It also requires a respectful assertiveness and a willingness at times to challenge stakeholders driving the programme to the best outcome in the shortest realistic timeline.

Leading an RFP process requires significant amounts of drive and energy. The peak of a recent process was a 3-week period where we had workshops across the 10 assessment categories for each vendor in the process. Outside the workshops we were scoring and then calibrating so we could deliver a recommendation to stakeholders promptly at the end of the process.

John Wilkinson is the Managing Director of John Wilkinson Consultancy Ltd. After 30 years working for major financial services brands, he now helps companies deliver major business transformations. Visit his Linkedin page here.

Read Part B of this post here.