By better utilising data and analytics, the financial services industry can improve member outcomes and help advice businesses grow, says Colonial First State’s Peter Chun.
If there is one trend that has touched, excited and motivated nearly every profession and industry this century, it’s been the evolution in the use of data.
It dominates team conversations and the volume of ideas it opens up appear to be infinite.
While the endless horizon is a must-have when it comes to evolution and delivering better customer outcomes, there is an obligation and responsibility we have to ensure integrity, accuracy and – most importantly – security and privacy.
In the speed of excitement and energy, I think the latter is an often neglected topic of the data narrative.
But before I dive into this, let’s first explore the opportunity of harnessing the power of data and analytics.
The benefits are clear for our industry: we can generate a deeper understanding of our customers, improve member outcomes and help our adviser businesses grow.
As an industry, we now need to be very much on the journey of using data to drive actionable insights, through capability such as data visualisation and predictive analytics.
With the right capability and expertise, organisations have the ability to really read a customer by moving deeper into their mindsets, behaviours and experiences.
No longer is it about the aggregation of data or modelling, but rather about specific insights that are driving conversations to empower a business along the lines of: “here is the data set, here is its interpretation, and here is an approach you can follow to address this opportunity or roadblock”.
It is interesting to see how each organisation is approaching the opportunity.
For CFS, we are in the midst of developing the next wave of research of deeper analytics and richer insights thanks to our partnership with the University of Technology Sydney (UTS).
UTS has a market-leading research capability with a focus on big data, data sciences and data analytics.
Utilising their scale and research expertise, we are now delivering the information and tools to inform and shape product, marketing and distribution efforts as well as provide a better understanding of how people engage with their finances and what actions we can take to improve it.
One way our UTS partnership is already delivering for advisers is via our ‘Together Adviser Business DNA’ packs, which provide advisers with greater visibility over what is driving their business.
Actionable insights about business revenue, outflows and rollovers, attrition, practice viability as well as, most importantly, a comparison to peers, are just some of the data sets we provide.
Yet while the opportunities are clear and also endless, they present us with challenges. This is the other half of the data narrative and a threat we should all have our eye on: cyber security and digital crime.
Our profession collects a significant amount of data on behalf of our clients.
There are hazards for our clients in providing this information, and therefore a responsibility for all of us is to ensure this data is protected.
Privacy, and the appropriate use of customer information in this digital age, is becoming an issue that more and more customers are interested in.
As a profession, we need to be secure. We look after retirees and their retirement.
This is a long term game and our clients need to be confident that whatever platform, product or solution their adviser recommends for the next 40-plus years is safe, stable and secure.
The frequency and cost of information security and privacy incidents continues to rise, and financial services organisations face increasing threats from insiders and third-party partners, as well as intensified scrutiny from industry regulators. And rightly so.
Sharing data and working with multiple partners means we open ourselves to a new ecosystem of opportunities and risks.
It’s critical to understand this and protect ourselves and our customers. The thought of more bespoke product solutions that are relying on bolt-ons and plug-ins, rather than robust and well-tested integration programs with the backing of big organisations, quite frankly, really concerns me.
CFS, with the backing of CBA’s scale and expertise, have certainly stepped up our own processes and we are detecting more regular attempts of fraud.
One recent example of early detection and prevention saw CFS stop the fraudulent withdrawal of funds, via an adviser, following the hacking of their client’s email.
We are operating in a world filled with more data. We can use it for better customer outcomes and healthier businesses but there is also a huge element of trust that customers place in advisers’ hands to ensure that data is protected in an era of increasing digital crime and cyber security threats.
Being an innovative technology partner is important, but advisers should be placing equal importance on those technology partners that have strong capital and good access to global technology trends and insights.
So let’s ensure that both sides of the data narrative are being played out. Because the data will only be available to analyse so long as there is faith that the information is in safe hands.
Peter Chun is the general manager for product and investments at Colonial First State.