2022 a year of potential for financial services industry and its customers
While any crystal-ball gazing is risky, there are a number of trends that are set to play an increasingly significant role in the financial services industry in 2022 and beyond, says Craig Keary (pictured), CEO Asia Pacific at Ignition.
“After two years of pandemic and the associated lockdowns, many people are looking ahead at 2022 and wondering what to expect.
“There are signs that the year ahead will one of good opportunities and potential for both financial services institutions and financial planners.
“Many of these tailwinds have arisen directly from the COVID-19 pandemic and will shape the industry for many years to come.”
Accelerating digital adoption
Keary says that one of the biggest trends in 2022 will be the accelerating adoption of technology in financial services.
“The COVID-19 pandemic triggered an increase in the take-up of technology by both businesses and individuals, and it is happening even faster than many expected.
“We have already reached the point where doing nothing is no longer an option. Organisations – whether financial planning firms or large institutions – that fail to implement appropriate digital offerings will struggle to remain relevant.
“If we look at what is happening in the UK, the lessons are very clear. The UK financial services market is a couple of years ahead of Australia in the digital trajectory and therefore provides a good signpost of where we are heading.
“Organisations are introducing broader and stronger propositions that will allow them to reach new clients, add real value to their existing clients, and consider better propositions for under-served client segments,” he says.
Keary says a key UK trend is the increasing commercial benefits that organisations are seeing when introducing digital advice propositions.
“Our experience in the UK shows organisations who have implemented a digital advice model are experiencing significant reductions in organisational operating overheads and are servicing more customers while reducing advice delivery times.”
Growing demand for financial advice
Keary says the need for financial advice, or guidance, has also accelerated.
“COVID-19 has significantly impacted our society’s mental health and wellbeing, particularly financial wellbeing. In Australia, research suggests that one in four people are under financial stress as a result of COVID.
“Digital advice solutions allow institutions to deliver financial advice at scale and help their customers achieve a more stable and secure financial future.”
Combining human and technological advice
Keary says that since the onset of pandemic, people’s comfort levels with technology and digital interaction has risen dramatically.
“Consumers have shifted to digital across many categories, and the majority intend to continue using technology more post COVID. Digital financial advice has significantly evolved since the days of robo and now advises across insurance, savings and retirement. Whereas robo advice simply told people where to allocate their investment, digital advice tells people whether or not they should even be investing.
“Today, consumers are primed for financial institutions to use technology to do the heavy lifting such as data capture and digital factfinding, allowing financial advisers or branch staff to increase direct support to more clients and customers.
“In my view, technology and humans can work together to do this. The answer for institutions looking to deliver advice at scale isn’t about putting more technology in the hands of advisers, it’s about enabling the end-customer to participate and help with the process. This will be particularly important as declining numbers of advisers attempt to serve the growing demand from consumers.”
Expectations of social responsibility
Keary said the growing expectation that companies will behave in a socially responsible way – including environment and governance considerations – is another trend that will continue to grow in 2022.
“Social responsibility expectations have accelerated during the COVID-19 pandemic, and will continue in 2022.
“The financial services industry is ideally positioned to contribute to meeting this demand. Not only can it help people invest their money in a way that is socially responsible and deliver affordable digital advice for simple insurance, savings and retirement needs, it can also play a key role in improving people’s wellbeing.
“For example, raising financial literacy levels can help people make better financial decisions and create more prosperous futures. Financial services companies can use technology to enable greater access to proactive financial education, calculators and financial health-check tools, in a cost-effective and efficient way,” Keary says.
“Perhaps the best news for the industry in 2022 is that there is alignment to make it easier and more straight-forward for financial planners and institutions to offer this support and assistance to Australians.
“For the first time, the government, regulators and industry are all working together to improve the affordability of advice and ease of access. The Federal Government and ASIC have both recognised the role that technology, via digital advice, can play in helping achieve this, and we anticipate that 2022 will see these ambitions come to fruition,” Keary says.
