John Wilkinson on digital advice strategy

John Wilkinson has spent a successful career in Financial Services with companies such as Nationwide, HSBC and L&G. Two years ago, he set up his own consultancy business and has been focusing on developing digital advice models for companies such as Barclays Wealth & Investments.

Oli Templeton, Principal, Financial & Professional Services, talked to him about how to execute a digital advice strategy, excellently.

John Wilkinson Interim

Q. Whilst getting the strategy right is important, it all then hangs on how the plan is executed. Where is the best place to start?

Once the target market, strategy and customer proposition are defined, a high-level customer journey can be mapped. The best starting point is then Target Operating Model (TOM) design. The high-level customer journey represents the value chain from which the TOM (technology, people & 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, along with implications for organisational design, capability development and workforce planning.

 

Q. More companies are choosing to buy in third party software rather than build themselves. What aspects are critical in choosing this route?

‘Adopt not adapt’. 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, 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). Your TOM is likely to include a variety of internal and external technology solutions – digital front end, advice software, CRM and books & records platform to name a few. These standards dictate how both data and services can pass between them. Chosen third parties need to operate to these standards and this can be examined as part of an RFP process.

 

Q. You mention the RFP process - do you have any tips for choosing the best supplier?

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, and 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%-54%.

Although it is critical to gather good vendor assessment requirements up front, it is also useful 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.

 

Q. Whilst it seems that most companies are going down the ‘hybrid’ route rather than pure robo, what part does automation play in building a digital advice model?

Automate all that you can. This comes in a variety of forms.

(i) Use Business Process Management Software to enable Advisers to advise and nothing else. BPM (Business Process Management) 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 x traditional levels as the BPMS directs all non-advice activity towards lower cost resource.

(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.

(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, for example, 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.

(iv) AI & 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 1 of Machine Learning for Dummies is to identify the specific business problem you are trying to solve rather than jump on the ML bandwagon.

 

Q. What type of leader is needed to execute this transformation excellently?

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 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 exec 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 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.

If you are considering engaging an Interim Executive, please contact Oli on 020 7822 7430 or email otempleton@interimpartners.com.   

Oli Templeton is Principal, Financial Services at Interim Partners. 

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