Creating the Solos of the Future?

The creation of innovation labs and digital garages by major brands and enterprises has become commonplace over the last few years and is a trend which shows no sign of abating. The mandate behind them is clear and largely universal, even if specifics around success measures and targets are harder to come by.

To work with small groups of smart people to develop products and ideas which large organisations would not be able to deliver within their existing structure.

Personally, I’m all for these facilities and I know for a fact that many are spawning great ideas (hopefully enough to keep their sponsors happy). Innovation functions which operate efficiently are picking up where research and development functions and propositional designers have failed over the last decade.

The silos of the future

These functions can be a brilliant way of introducing a pipeline of new ideas into a business but there is a problem which is all too often overlooked in favour of the next shiny thing. Without having an overall architectural vision and working hard to make new developments a part of the overall business and technology infrastructure, innovation functions run the risk of creating the silos of the future.

We often look at legacy business and technologies with a smirk as we see stove-piped pieces of product-led technology and operational support which seemingly have no view of shared capabilities and functionality. These often represent the hangover of a series of M&A activities spanning the past few decades. While many of these business lines can be profitable, this is often thanks to the very high margin business they run. The cost of supporting these legacy systems is typically very high and requires specific expertise that’s hard to come by. They also represent a large technical debt which increases the complexity of future change.

Unfortunately, without an appropriate level of planning, each new proposition runs the risk of standing alone within your company’s ecosystem. This is likely to counter any positive revenue impact from the propositional development and lead to a large mediation programme to “tidy things up” in the future. Today’s innovation becomes tomorrow’s legacy all too quickly.

Just enough architecture

In terms of mitigating against this, architecture (both business and technical) is a key consideration but it is important to be pragmatic when delivering this. The agile concept of “just enough architecture” is an important one here. It will vary between businesses but success will come from finding the optimal amount of information to gather to ensure change is done well. Not so much that you have teams of people spewing out requirements documentation, but also enough that it is not merely an afterthought.

By including analysis of key business and architectural objectives you should be able to think through some high level scenarios which show interaction between key actors in your proposed solution. An application overview, with key coupling points can follow this and will allow for future flexibility around integration and expansion.

A good old fashioned business case?

In addition to assessing the “do-ability” of concepts being developed through the innovation function, it is important to make sure teams adequately reflect on whether they should bother developing them at all. Of course, this question isn’t new, and has been the main point of a good old fashioned business case for many years.

I’m not proposing you produce a three hundred page board document with the ins and outs of every growth scenario, but I do think that, even though you’re developing innovative ideas, you should challenge yourself with some key questions and make sure key stake holders agree. If you don’t know the answer to these, I’d suggest stopping and taking stock is a pretty good idea;

  • Who is this for?
  • How do we know they want it?
  • How much is it going to cost if we a) prototype this, b) develop and launch this?
  • How will we know if this is a success?
  • How does this fit into our existing enterprise landscape?

Conversely, for every innovation function which could do with adding a commercial focus, there are others which are incredibly astute and will look to bin projects if they can’t show a return within a year. While these functions are far better at removing dead wood than traditional change functions, there still needs to be some careful planning around how the solutions work within the organisation as a whole.

For innovation functions to truly deliver positive and tangible change into businesses, there needs to be a refocusing from the short-termism and bauble chasing which some have fallen victim too, and a reflection on the value of solid business planning and architecture.

If you get these things right, the cool things you create might just be of enduring value to the business as well.

This article was originally published on The C Suite

Innovation in Insurance – Personalised pricing and the risk to pooled risk

I was on a panel session at the Benefex Client Winter Forum recently and was asked what I thought the biggest technology driven changes in financial services would be and how they would impact employers and the services they provide their staff. While everything about the world around us is changing at pace, there was one area in particular which stuck out like a sore thumb. Insurance.

In the workplace context, insurance is vital to most benefits packages. Life cover is standard, and health and critical illness cover are also increasingly popular enhancements for staff. Additionally, while pensions saving has moved towards defined contributions, there is still a key insurance contract for most people in the annuity that we buy when we retire.

There is change afoot however, in the way insurance is sold and priced, which could have a profound impact on employers and employees alike.


The amount of data available about individuals (and by extension, society as a whole) has exploded in recent years and the more recent additions of wearables, connected homes and increased mobile usage have taken us to a point where, for most people, there is a wealth of data ready to be mobilised by firms.

On a day to day basis, we see this data being put to good use. Our shopping experiences are tailored based on what retailers know about us. Our web searches are focussed in on our location to make the results more relevant. Our email accounts strip content to create reminders for events and travel plans to stop us missing important dates.

Insurance providers of all types are now trying to make use of this data in order to provide more competitive and accurate pricing for customers. The basic principle is that with more data known about someone, the pricing can become more specific and tailored, reducing the risk and ultimately ending up with a keener price for both the client and the insurer. It also has the associated benefit of reducing the likelihood of non-disclosure and policy fraud. Or at least, that’s the idea.

For insurance providers, this is really the continuation of a trend.


All traditional insurance business is based on the principle of pooled risk. When you take out life insurance, for example, you are becoming one of a group of people with the same policy. The insurance company has made a series of assumptions about your group. They think some people will die earlier than you will, and some people will die later than you will.

They calculate what they believe to be the likelihood across the book of business, and price the policies within this book to reflect those assumptions, and a bit of profit of course. Up until recently, the way insurance companies looked to derisk themselves from the unknown was to shrink the size of the pool and to manage multiple pools to balance risks across well understood books of business.

  • I’ll only insure drivers over 55, and younger than 75, because I can obtain a range of data sets which show that, historically, that group has been safer drivers than the average.
  • I’ll only offer this annuity to people who have recovered from critical illnesses because I can make some firm assumptions about their longevity.


Now though, with the prevalence of data, insurers are looking to move away from traditional pooled risk groups, and instead assess risk on an individual basis. On the surface this might appear to be a positive step. Car insurance is a nice example. Drivers are in control of their speed and driving style, so it seems reasonable to assess them as an individual and price accordingly based on real time data. Better drivers get cheaper policies and vice versa.

Applying the same principles to life insurance and health cover is a much thornier issue though, and there is a high risk that large sections of the population would essentially become uninsurable as a result of these developments. On an individual level this is obviously worrying and could lead to a number of challenges, but for employers, there is an added layer of complexity.

While many firms are used to dealing with renegotiating and quoting for workplace cover policies, I’m pretty sure very few have thought through how to handle the case where a high percentage of your staff can’t get health or life cover. In order to manage this, employers are likely to need to think of strategies which allow them to collect data on their workforces, via connected devices and fitness trackers.

This data would have to be anonymised (especially with GDPR around the corner) but will provide employers with a way of proving a general level of fitness for their workforce. In a few years, it is likely that this is the only way an employer will be able to get a reasonable workplace policy without it being prohibitively expensive.


This blog was originally published on the Benefex Blog here

Robo-Advice is failing. Intelligent Advice is Next

Robo Advice is failing

Robo-advice has been a persistent buzzword recently and never seems to be far from the trade press even though much of the activity has been predictable repeats of the same old formula:

  1. Provide a risk assessment of some sort
  2. Drive consumer to risk rated portfolio of cheap passives plus a not-so-cheap discretionary charge
  3. Claim that this isn’t actually advice because you didn’t understand enough about the customer
  4. Rinse and repeat


Equally predictable is that the asset inflows and mass customer acquisition promised by robo 1.0 have failed to materialise. I can’t say I’m surprised by this, as there is a core failure at the heart of this model. Providers typically set out to sell rather than help their clients understand more about their financial lives and work out what is right for them.

There is also a more prosaic challenge around target market segments. I have long said that retail banks and scale brands are likely the only firms who can make a real success of the endeavour. Successful robo-advice requires a proposition which is fit to distribute to many lower net-worth clients while most of the nouveau discretionary managers are typically targeting the fertile but incredibly hard to attract high net worth segments.

On the plus side, behind closed doors, some organisations are beginning to embrace the fact that there is more to advice than just driving a decision to an investment portfolio. I have met with one established FS firm and a couple of start-ups recently who are approaching automated advice from the point of view of helping the customer understand their financial life to drive better outcomes. In all of those cases, I’m really excited to see the output (all of which should be in market in 2017).

Intelligent advice is next

But what next? If, on the whole, robo 1.0 has been a failure, what are firms doing to make the next wave of robo advice a success? There are a number of key threads one could pursue here. Integration with wider financial ecosystems, brand affiliations with non-FS firms, multipurpose messaging platforms like Facebook messenger and Wechat and the marrying up of investment advice with the wider universe of financial services all spring to mind but as a technologist, there is one that I’m even more interested by.

Artificial intelligence

Firstly, let’s get the basics right. Artificial Intelligence is a bit of a misnomer in its current usage. AI really means a system which is capable of the same kind of intelligence and thought as a human. We are a long way away from that on all fronts, but what we are seeing enormous inroads into are aspects of specific intelligence. i.e. computers doing certain defined tasks as well as (if not better than) a human.

Machines are getting smarter at getting smarter

There is one particular aspect of AI which could have a really big impact over the next few years, and that’s machine learning. Essentially the ability for predefined pieces of software to build on and improve themselves without the requirement for human intervention. I won’t dig into the details on how it works here, but there is potential for enormous disruption in the investments sector.

We have already seen firms like Bridgewater building AI into and these will certainly be based around machine learning. Financial markets are complex and changeable. By allowing a software system to modify itself based on direct feedback from the network, the hope is that over time, these systems become first as good as humans are at stock picking, and then better. One of the perks of AI is that, while human’s have a cognitive cap, in theory machines don’t, so they can get smarter and smarter at their jobs.

So if that’s the bleeding edge of asset management, how does this get connected back to retail customers? Well, financial planning ultimately is about matching consumers needs and goals to tax efficient products and identifying investment options which sit within these. If we have developed a system which gets smarter and smarter at playing the markets, there is nothing stopping us developing one which manages tax efficiency for investors. In fact, this represents a much easier challenge especially with PSD II on the horizon (regulation which will force bans to open up and share data about consumers).

Reading the regs

But what about the way regulation and tax law are applied to investment and product decisions? Currently, if you want to understand the full detail and implications of the various regulatory frameworks, sourcebooks and tax laws you have no option but to put in the hard yards of research, or hire in smart people who have already done that. In most cases, you end up having to do both.

The work that big tech firms (IBM ,Microsoft, Google etc.) have been doing around natural language processing means software can already understand human freeform speech and text and manage the translation of this across multiple language bases with a system which teaches itself how to continually improve what it is doing. It won’t be long before we have a system which can actually read the regulatory framework, understand the difference between rules and guidance, feed in the entirety of tax law and make interpretive decisions based on the full data set.

A different type of software

Throw in a few other related developments in the AI space, and we are rapidly approaching a point where we can move away from having to define siloed systems which deal with tax efficiency, investment picking and customer management. Instead, we will be looking to develop unconstrained self-improving systems which can learn about retail customers, and their differences from professional investors, ascertain which aspects of the regulatory framework would apply to their subject and execute a series of cash movements, product opening instructions and investment trades on their behalf, all the while, making sure it stays within the bounds of the firm’s regulatory permissions, or indeed, applying for new ones if necessary.

If you had absolute confidence that a tool would give you the correct recommendation regardless of context, then the jobs of advice and investment management change. Ironically, as time goes on, the challenges will become less about the technical capabilities (which will march onwards) but more around the regulatory construct (because NOTHING in the FCA handbook is based on regulating something which you don’t understand) and the risk appetite of firms to adopt such approaches.

Ultimately though, we could see the emergence of a genuinely intelligent advice. Delivered via computer algorithms for next to no cost, and solving the challenge of complexity which currently requires the employment of thousands of intermediaries, advisers and experts of all shapes and sizes. Of course, in this future vision of automation and AI, the human touch points for interaction will be vital in building empathy and confidence.


This article was originally published on ––intelligence-advice-is-next/



D2C Wealth Platforms: A Decade of Evolution

D2C wealth platforms have changed a lot in the last ten years.

Well, that was the premise I started with when I began researching this blog. As part of Altus’ tenth birthday celebrations, I wondered what might be the best way to reflect on the D2C investment market. I could have spoken to some product providers, or had a look at the tech people were using, but instead I just Googled it. After all, 2006 was also the year where Google was added as a verb to the Oxford English Dictionary.

My search soon led me to the Wayback Machine (the global internet archive). I undertook a complex scientific selection process (i.e. I picked three platforms at random) and had a poke about their websites to see what I would have been offered as a customer in 2006.

I was presented with a range of functionality. I could open an ISA or a SIPP. I could buy unitised funds or exchange traded instruments online. There were some investment research tools, and fund fact sheets which told me about the things I would be buying. There were even some multi-manager solutions and passive options available to me if I didn’t want active funds.

So let’s roll the clocks forward to 2016. With the weight of ten years of innovation and improvement behind them, what are these sites offering me today?

Well this is where my opening hypothesis falls apart slightly. I am still being offered ISA’s and SIPP’s. I can still buy unitised funds or exchange traded instruments online. There were some investment research tools, and fund fact sheets which told me about the things I would be buying, and there were even some multi manager solutions and passive options available to me if I didn’t want active funds.

But of course, the platform industry is more evolved, and things have changed. Importantly though, it isn’t what they do which has changed, so much as the way they do it.


User Centric Design

We have seen a focus on user centric design in the way websites are constructed, trying to pull away from the purely transactional interfaces of a decade ago. Incremental usability improvements have been introduced and key journeys have been reconstructed. We will see this continue as many approaches (originally taken from agile methodologies and UX design) are brought into innovation labs at leading financial services firms. Firms have been using participatory design, customer testing and ethnographic research to continually develop and improve their client engagement.



We are also seeing the emergence of robo-advice and other customer support tools in the web interfaces which are helping to guide clients to solutions which are appropriate for them. The emergence of bigger brands (notably high street banks) offering robo-advice for mass market consumers is the next likely advancement here, and would be a game changer in terms of client acquisition.

Robo-advice is in fact the latest incarnation of a gradual seam of change which has been taking place over the last decade; product simplification. It has resulted in margined trading, FX and CFDs no longer taking pole position on the front page of D2C wealth websites as they were ten years ago.  Instead we are seeing core ranges of risk rated funds at reasonable prices with the complexities of a fuller open architecture fund range often being hidden from view.


Financial Ecosystems

Sitting across this development is a recognition that wealth platforms are only ever one aspect of the financial ecosystem a customer interacts with. The concept of wealth solutions interacting with other product lines from multiple providers is something which has begun to gain traction. Independent aggregation services already exist in the market (see moneyhub and MoneyDashboard for two examples) and the advent of PSD II will only serve to make this aggregation easier. When big brands who offer multiple business lines begin to operate as effective hubs of aggregation and multiple service lines, customers will become increasingly sticky.

On balance, what I think we have seen in the wealth sector is a slow realisation by the industry that it is the C in D2C which really matters. There has been a shift from a focus on back end technology to front end client engagement. This has driven an evolution in how services are presented to clients which has opened services up to a wider range of clients. We have seen the industry move from offering complex functionality for hobbyists to simplified financial options for the mass market.

There is still some way to go in the space, but leaders like Hargreaves will sit alongside major brands in developing propositions over the next ten years that put client needs at the heart of what they do while those that don’t will be relegated to the depths of the Wayback Machine.


This blog was originally published in the Altus Consulting Blog. You can find the original blog, and many more great pieces here:

You can find more articles from me on my website and on LinkedIn

Digital Ecosystem Management: Top Drawer IT Management

When Altus asked me to put together a blog on the last ten years of innovation in digital ecosystems, I’m not ashamed to admit I was pretty excited. I mean, ten years ago, the world was a very different place and there has been a wealth of innovation in the digital space since then.

Mobile phones are a great example. The year before the IPhone was first launched, the winner of Mobile Gazette’s phone of the year was the Sony Ericsson K800i. It had a colour screen, a camera, and even a decent music player. That said, I think it’s fair to say it doesn’t really hold a torch to the iPhone 6S or a Galaxy S7 Edge which are, depending on which ‘top trumps’ feature you would like to compare on (storage, screen quality, camera etc.) between 50 and 100 times more powerful.

So what of the noble K800i? Where have the once proud owners of these devices decided to display their possessions? Discarded at the back of a draw or in a sorry looking window corner of Cash Convertors is my best bet. They have become outdated and massively superseded, so consumers have discarded the devices.

And good on them I say. Embracing new technology brings with it fantastic benefits. So what does this matter for financial services organisations? Well, the simple answer is, they can’t just move on.

The technology estates of Retail Banks and Life Companies are riddled with a complex mesh of technologies from every imaginable era. There are original COBOL and iSeries/AS400 units from the late 1980s sitting alongside fragments of client-server architectures that were supposed to replace them. Surrounding these are newer n-tier architectures and cloud services from a cornucopia of sources feeding data in from across businesses and external sources (via any number of data transfer types).

All of these systems are supporting the numerous complex calculations which underpin products for retail clients which are designed to last a lifetime. There are active client books a plenty, and although they often have dwindling numbers, migrating customers away from these systems represents a significant challenge both operationally and technologically.

The reality is, regardless of the technical challenges, these legacy systems should have been shut down properly long ago with client books migrated to more sustainable platforms. This would have been the equivalent of sending our trusty K800i off to Envirofone. Instead, firms have decided to throw it to the back of the desk drawer and forget about it.


After all, decommissioning programmes are never as exciting as the put-in-new-technology programmes. They just save you money, simplify your processes and de-risk your estate.


I want shiny new stuff!

It’s all very well throwing your old tech to the back of the drawer but, after you’ve done that a few times, the drawer starts to look pretty full. You start to lose track of how many phones you have, which phones are in which drawers and whose numbers are in which phone. Firms need to get on top of this mess of technology or they run the risk of not being able to find anyone who still knows the unlock codes.


This blog was originally published in the Altus Consulting Blog. You can find the original blog, and many more great pieces here:

You can find more articles from me on my website and on LinkedIn

Profitability pains: Robo-advice market stalls plans over financial fears

Money Marketing asked me to comment on profitability in the robo-advice market in the UK. My view was as follows, with a link to the full article at the end of the post. Would love to know what you think.

Expert View – Altus Consulting innovation head Adam Jones

The UK began by looking to the US for its “robo inspiration”, but the market and regulation are so different that transplanting the same business model is not appropriate. Most offerings have ultimately manifested as online, directly sold discretionary fund managers aimed at higher net-worth clients who had a lot of PR noise but not a lot of traction.

The key gap, however, remains: that of mass-market advice which opened up in the wake of the RDR and offers a rich seam of potential. There are millions of people who have previously not invested outside pensions and employer share schemes, but who need to make more from their money than current interest rates.

Smaller robos have been unwilling to tackle this area as the inherently low margins and high cost of acquisition make profit elusive. In order to succeed, firms will need to be servicing hundreds of thousands of customers, with a focus on smaller, regular contributions, robust automation and straight-through processing. They will also need an incredibly strong brand presence and a very long list of potential customers to market to.

This takes the opportunity away from start-ups and existing advice businesses, and instead places it squarely with retail banks and non-financial services consumer brands. We are likely to see the smarter robo start-ups realise this and pivot to providing white-labelled or enterprise software solutions through brand partners.

The barrier, as always, is the regulation within which advice needs to be delivered, but once a major brand cracks this with a live offering in the market, the others will follow suit rapidly.


Originally published in Money Marketing


Platforms Vs Adviser Back Office systems: A fight to the death?

There has been a silent war rumbling for many years now. It started with the emergence of a new market competitor around the turn of the century; Investment platforms. These flashy new web based offerings promised to provide the perfect antidote to the heavily paper driven world of financial advisers. They were structured to take away the pain of having to maintain direct relationships with umpteen fund groups across the country and to offer a simple and compliant way of managing trading, custody, settlement, client money and the all-important remuneration calculations.

Credit where it’s due, platforms have made a pretty good job of sorting out the administrative mess at the back end of most advice businesses. We certainly live in a more scalable and robust world than we did ten years ago as a result. This said, platforms haven’t really done a great deal for customer management. Don’t get me wrong, having an electronic source of some of a customer’s wealth was a revelation for many when the first platforms launched to market. A daily valuation of a price which is derived daily, delivered live to a computer screen near you. Hallelujah!

The problem, however, was (and still is) that only some of the client’s wealth is represented on a platform and platforms on the whole haven’t done a great job at spreading their wings to clients’ broader finances.

Enter the other side of the aforementioned war; adviser back office systems. Positioning themselves as a cross between a domain specific CRM system and an ‘advice process’ workflow engine, these systems have always had customer records at their heart. The problem has typically been the ‘everything else’ that they should have like up to date investment valuation and product positions, ancillary product line data and market information. Of course the challenge here is that those investment valuations are based on assets held across many platforms (and also many non-platform entities).

And so, for the last decade or so, both sides of the debate have shared a relatively uncomfortable co-habitation. The problem is, this uneasy equilibrium is bound to break at some point. Both parties are desperate to avoid being relegated to a utility service which is solely price differentiated. To counteract this, both platforms and adviser back office systems will try and claim more of the value chain. For platforms, there is a logical extension into offering better services around the ‘IP’ of asset selection. Be it through select fund ranges, internal DFM portfolios or additional investment selection tools, there is potential for platforms to make themselves increasingly useful to the investment committees and fund pickers at networks and firms.

Platforms also have the ability to improve their end-client interaction. Many already offer client portals as an additional enhancement for their advisers, and with the introduction of open banking and PSD II next year, it would be very straightforward for platforms to start pulling in customer banking data and building wider and more holistic views of client’s financial lives.

Adviser back office systems are equally well placed to start enhancing their offerings by building on the client portals that many already offer to make them more user friendly, and more integrated with a client’s financial life. They have the added benefit of already having access to a range of assets held across multiple platforms, while platform providers by definition only have access to one.

The one great gap for adviser back office systems is functionality for trading, custody and settlement. Without this, adviser back office systems will never completely remove investment platforms from the value chain but addressing this would be no mean feat as the area is riddled with complexity, both from a technology and a regulatory point of view. If they managed it though, it would likely leave adviser back office systems as the true central tool for adviser firms.

Of course, the regulator waded in on this during the RDR by all but dictating that advice firms are likely to need to use more than one platform unless they are particularly adept at segmenting their client books. As many of the larger firms struggle to maintain accurate address details for their clients, I think that might be a challenge and could put adviser back office firms off the idea of removing the platforms from the value chain. This said, there is a reasonable argument that the platform itself is secondary to the charging model and investment ranges which apply to specific clients. If adviser back offices were able to carry out some reliable segmentation of clients and tailoring of product based on this, they could be offering useful and compliant services.

It feels to me that there will be a shift over the next few years for both platforms and adviser back office systems as they position themselves to take more of the value chain. Both have challenges ahead which are central to their current business models. For platforms it is becoming a resource which can see wider than the walled garden of assets it holds in custody and potentially expanding into deeper investment services. For adviser back office systems it is the implementation of trading, custody and settlement which is both compliant and robust. For the victor the spoils are a solid place at the heart of the advice firms they service. For the party that fails, at best a future as a utility provider servicing business at the lowest possible margin and at worst, complete obsolescence.


This article was originally published on –


Adam Jones Head of Innovation at Altus Consulting and is responsible for research, thought leadership and consulting engagements relating to FinTech and emergent technologies. Adam has a range of experience across a number of emergent technologies including artificial intelligence, blockchain and distributed ledger technologies, RegTech, InsureTech and robo-advice. Adam has spent his career working within FinTech and financial services more broadly with an equal balance across business and technology work.