Bob Winnington is Executive Officer of the Money Advice Liaison Group (MALG).
I was pleased to be asked to speak at the Debt Managers Standards Association (DEMSA) 2017 Conference in Manchester last week.
This gave me the opportunity to set into context the topic of Shaping the Future of Money Advice which will be the theme of the upcoming Money Advice Liaison Group (MALG) 2017 Conference in November. The key themes brought together my background in customer service and my experience of re-shaping and developing MALG since joining the organisation just over 12 months ago. Here is a summary of my presentation for those who were unable to attend:
Money advice – where are we now?
Before future gazing, it’s important to understand where we are now. The money advice sector in the UK is complex and we are facing big issues and challenges but huge strides have been made in recent years, especially when it comes to understanding and addressing vulnerability and mental health.
A preventative advice gap has been identified and is being addressed and advice organisations are calling on Government for more ‘breathing space’ for consumers in debt. High cost credit is in the spotlight with fears over household debt growing because of stagnant/fluctuating incomes, less job security, and welfare reforms.
By 2021, people will be worse off in real terms then they were in 2003 and it is estimated 1 in 8 has some form of problem debt. Add to that the uncertainty of Brexit. There are a growing number of clients without solutions and it could be argued that the standard approach to money advice isn’t working, even despite the introduction of the Standard Financial Statement (SFS).
The future – immediate and future challenges
We are already struggling to meet demand and future demand will increase while future capacity will decrease. We need to ask ourselves what the purpose of debt advice actually is. Is ‘debt free’ a legitimate aim? Or should we really be thinking about ‘managing debt’?
The challenge we face is the need for consumer credit to drive economic growth and the need to build capacity within the money advice sector. The questions we need to be asking are:
- How are we planning to build capacity?
- How are FCA accredited organisations looking to invest?
- Is technology an enabler or a solution?
- How far down the tech route can we foresee?
- What are the fee-chargers currently thinking about digital technology / fintech?
- Will we see debt advice specialists in collection departments in the future?
Applying world class customer service to money advice
Since taking over the leadership of MALG, I have aimed to apply best practice customer service models to the organisation by re-aligning the ‘lens of the organisation’ to move from a focus on products, processes and people, to outcomes, benefits and results. Reputation, performance, growth, profitability and trust should be at the core supporting the three key themes of Strategy and Culture, People and Processes. These same principles need to be applied to how we approach money advice in the future.
One aspect that will certainly be a game-changer, when it comes to how we view the ‘customer’, is Open Banking. Open Banking will use APIs (Application Programming Interfaces) to share customer information with banks and other financial service providers securely, resulting in the ability to offer reliable, personalised financial advice, tailored to customers’ particular circumstances delivered securely and confidentially. Third party providers will be able to help customers get the best deal using the data and customers will no longer have to hand over confidential information to price comparison sites.
This will provide a single system that gives you the power to see and control all aspects of your customer relationships in one, central location. It will involve applications specifically designed for strategists, agents, and your customers, offering solutions from marketing and customer service, to collections, recovery, and agency management. An Agent Desktop will provide a full view of the customer relationship to enable firms to engage with customers more immediately and effectively.
The fintech landscape
‘Fintech’ describes the emerging rise in technology in the financial services sector in the 21st century. Originally, the term referred to technology applied to the back-end of established consumer and trade financial institutions. Since the end of the first decade of the 21st century, the term has expanded to include any technological innovation in the financial sector, including innovations in financial literacy and education, retail banking, investment and debt management.
Who uses Fintech? There are four broad categories:
- B2B for banks and
- their business clients
- B2C for small businesses
Trends toward mobile banking, increased information, data and more accurate analytics and decentralisation of access will create opportunities for all four groups to interact in new unprecedented ways.
The key is to ensure that we maximise the benefits and applications of this new technology for money advice. At the MALG Conference 2017, our interactive exhibition will feature fintech companies demonstrating the latest applications so that money advisers can see how they work in action.
With an increase in demand and decrease in capacity, traditional forms of money advice are not fit for the future. We need to adopt a word class customer service model with technology as an enabler, rather than a replacement for real life customer interaction. Open Banking and fintech will shake things up but game-changing solutions will only come from real innovation that looks beyond the immediate challenges we face.
We’ll be discussing all of this and more in much greater depth at the MALG Conference on 27 November 2017, with the full programme and line up of exciting speakers to be announced soon. Keep up to date with the latest at: www.malg.org.uk/conference