As I climb into my car, I welcome the warmth in the car on the cold day. The car knows on Tuesday’s that I leave early for the office and pulls out of the garage 5 mins before I normally leave home and gets the temperature to my normal preference on a cold winter morning. “The office Sir?” it asks. After confirming, the car sets off to the office whilst I sit back in the recliner and clear my overnight emails on the onboard interface. “Please can you transfer the balance in my savings account to my SIPP and then invest it at a moderate strategy” I say, whilst thinking that in the olden days people would have thought I was mad if they could see a man alone in a glass bubble shaped car talking to himself, not looking at the road with two hands on the ‘wheel’ and looking in the direction of the traffic…”Shall I also top up the Amazon and Shoprite accounts Sir, as your Kitchen aid (ie the fridge) has just placed an order for the regular groceries”. The discussion went on such that by the time I got the office – I had paid for the groceries, invested my savings, re-evaluated my investment approach based on the latest robo advice assessment, cleared my emails and watched the news.
Life is so much more efficient these days and everything in life can be managed on the go without paper without signatures and all within the ecosystem built into my car and fridge. Everything is linked digitally with my voice and DNA as the key – gone are the days of pin numbers and passwords.
It is interesting that elements of the technology I see today in 2030 were there ten years ago but once there was no clear way of joining everything up. Once ‘open banking 2.0’ had been truly adopted, it changed the world of financial services overnight and using its sophistication, understanding of Blockchain 2.0 and size of the economy to act as a test bed, the Isle of Man showed leading nations how to do it. The past decade showed how a small economy can have interlinked systems, bringing together many sectors from financial services to retail to autonomous vehicles to energy and infrastructure. It makes us chuckle that in the earlier part of the century – everything had to be ‘smart’ from devices to cities and motorways but actually they were just the tip of the iceberg.
There is no doubt that all of this change needs companies to adapt quickly and be nimble but also for governments and regulators to change the way they operate. A prime example is the FSA – moving a few years ago to an artificial intelligence based supervisory system analysing huge data from every financial services companies in real time – assessing compliance with regulations, monitoring liquidity and reviewing solvency risks by the minute. Equally, AML and KYC has changed a lot in the past decade – now a central agency ‘talks’ to all companies, financial services and any other company that we trade with, to obtain a copy of an individual’s transactional passport. The identity of customers transacting with the Isle of Man is verified once, not with every provider of service – it makes life so much easier and led to a surge in the demand to use the island as the offshore centre most focussed on the ‘customer experience’.
Given the connectivity of all financial services businesses, those that have thrived over the past decade are those that have adopted technology, considered new delivery models, and built business models around the customer experience and the wealth of data availability. The differences between products are realistically narrowing and so whilst it sounds counterintuitive, the companies that have succeeded most are those that have focussed less on pure profit. When designing new products the focus is to have products that talk to the right platforms/ecosystems, the product purchasing and servicing processes are from start to finish designed with maximising the customer experience and providing products that the customer wants to buy rather than be sold to. If you can achieve all of this whilst making a satisfactory return, then customers will come in high volumes and you will succeed.
Technology platforms are the new distribution models, even for offshore centres. In the days of independent financial advisors, commissions were often high, if known at all, these days products are distributed with annual platform to cover all of the customer’s products. Those with connectivity into the right ecosystem, the digital one-stop shop providing all of the customer’s products and policies in one place, will prosper.
It has been so important to embrace the new technologies and major changes to business models over the last ten years - we would have been long gone if we hadn’t taken the right risks back in 2020.