Banks Must Leverage Tech Smarter to Improve Clients’ Financial Planning Journey

Financial planning can be a bit like going to a dentist: people don't always like it, but if done correctly it enables a more comfortable and happier life. In this rapidly changing world, financial stability shields us against uncertainties, but like getting the benefit from a dentist it requires commitment and application if it is to work.

Financial planning, however, can feel intimidating as it requires navigating complex financial products, understanding who and what to trust with our hard-earned money, and committing to investments that we hope will match one's life aspirations and beliefs. Today, with the help of advanced tech, financial institutions can use new tools to lift that anxiety for customers while also improving personalised service quality for individuals.

There was a time when financial planning was much more approachable. My family lived in a small town across from our bank branch. Our financial advisor lived in the same neighbourhood and had known our family for a long time — the children even went to the same school. Because we were all part of the same community, she understood our way of life. That is why my parents (and later myself) trusted her to help us navigate the myriad of often confusing banking and savings products with our best interests in mind.

However, as time passed, the bank embraced a digital transformation journey which meant many officers were reassigned to perform more back-office work. Self-service machines and internet banking was introduced to replace many of the previous face-to-face interactions. But without human advisors personal finances model became a lot more complicated for many people like my parents.

Banks attempted to provide digital services to address financial planning challenges. Some built expense analysis tools to help clients identify both spending patterns and opportunities to save. Many developed "goals calculators" that would allow the creation of a simple saving program by putting aside regular amounts to achieve short-term goals. More digitally advanced players set up life goal-supporting capabilities that could support retirement, house ownership, or education needs with a trivial purchase of investment funds or endowments.

But, despite these investments in digital banking services, most retail wealth management tools lacked the sophistication to deliver meaningful personalisation. They lost contact with the people they served as most banks remained product-centric instead of focusing on customers' personal journeys. Existing tools continued to reside in silos, often focused on a single goal without considering other investment initiatives. The constraints of existing financial planning tools meant that multiple customer segments were becoming underserved in financial planning.

But people, like my parents approaching their retirement, needed a more efficient and personal way of managing their finances digitally. And it is not just those nearing retirement who expect a hybrid approach to investment advice that pools a combination of digital service with personalised experience. Millennials are also waking up to the fact that, while they might be more digitally-savvy than their forebears, they too stand to benefit from a more personal guide through the complex world of financial planning.

Financial Institutions that are serious about delivering a positive impact on the quality of life for today's customers therefore need to look beyond the basics and leverage advanced tech to build more human-focused digital financial advisory services. The timing is perfect as digital banking channels have become established and most customers are comfortable using them. Also, the technology has matured, with advances in AI capabilities and cloud computing combining to support sophisticated and integrated financial planning solutions at scale.

Banks would need to address three significant challenges to improve financial planning offerings. First, they had to rebuild trust with their customers, to understand their lifestyle and aspirations to be able to act in their best interest. Second, the user experience must be simplified, cutting out the complexities of financial products and making the solutions more accessible. And finally, it became critical to provide holistic advice that considers all customer financial needs from a long-term perspective and tailors financial products efficiently.

The recipe for success should be straightforward. The ability to leverage human-centric design in combination with data analytics that understand customer preferences, lifestyles and aspirations will build client trust and confidence in the bank’s products.

This can then be aligned to customer journeys to create a simple and accessible experience that cuts through the complexity of financial planning. The combination of traditional models with artificial intelligence has the capacity to build longer-term, holistic financial propositions that can support customers' long-term aspirations and evolve with them. If done correctly, it should be a win-win, much like regular checks with your dentist prevent the need for disaster recovery treatment later.

In future articles, we will look in more detail at how banks can apply human-centric design and use technology efficiently to create an even more focused and relevant digital financial advisor.