The Consumer Duty is Proving a Fintech Opportunity

Together
with
the
trade
association
PIMFA’s
tech
arm
PIMFA
WealthTech,
Morningstar
invited
fintechs
to
a
tech
sprint
to
address
the
regulation,
which
came
into
force
at
the
end
of
last
month
and
aims
to
protect
consumers
and
raise
service
standards.

We
tasked
participants
with
creating
tools
for
understanding
customers,
with
increased
control
and
personalisation.
Using
Morningstar
APIs,
the
participants
developed
technological
solutions
where
wealth
managers
are
able
to
navigate
Consumer
Duty
rules
around
communicating
information
in
clear,
fair
and
not
misleading
manners.

Eight
companies
participated
in
the
sprint,
which
was
judged
jointly
by
Morningstar
and
PIMFA.
The
four
best
solutions
presented
their
product
at
the
Morningstar
Investment
Conference
UK
in
London
this
summer.

Impressive
Results

As
my
colleague
James
Gard
wrote

when
the
regulation
came
into
force,
the
Consumer
Duty
is
an
attempt
to
promote
good
outcomes,
reduce
scams,
and
help
vulnerable
people
access
products
at
affordable
prices.

In
the
regulator’s
words,
financial
companies
will
be
expected
to
provide
helpful
and
responsive
customer
service,
equip
their
customers
to
make
good
decisions
through
communication
people
can
understand,
and
provide
products
and
services
that
meet
consumers’
needs
and
work
as
expected. 

The
participants
had
access
to
Morningstar
Portfolio
Analysis
APIs
covering
asset
allocation,
geographic
breakdowns,
sector
breakdowns,
ESG
metrics,
risk
scores,
goal
analysis
and
costs.

At
the
end,
InvestSuite
and
Figg
were
crowned
joint
winners
by
the
Morningstar
Investment
Conference
audience.

Figg
aggregates
data
to
provide
a
collected
view
of,
and
intelligence
around
a
user’s
wealth,
collecting
information
across
custodian
types
from
pension
providers,
private
and
retail
banks,
as
well
as
alternative
valuables
such
as
art,
cars,
wine
collections,
and
real
estate.

CEO
and
founder
Sahba
Hadipour
explains
that
in
order
to
address
Consumer
Duty,
his
company
developed
a
“privacy-first
reporting
engine”
using
Morningstar
data.

“The
reporting
engine
anonymously sends
the
user’s
portfolio
to
Morningstar
X-Ray,
then
using
our
fine-tuned
generative
AI
model,
we
created
a
report
explaining
investment
sectors
and
geo-diversification,”
he
says.

“The
information
then
takes
a
deep
dive
into
each
sector,
explaining
the
ROI
of
each
stock
within
that
sector
in
12
and
36
months,
providing
the
user
with
insights
about
their
short
and
long
terms
returns.”

Addressing
the
need
for
digestible
reports
was
among
the
key
challenges
the
various
fintechs
wanted
to
address.
Fellow
winner
InvestSuite,
a
company
which
offers
white-label
solutions
for
portfolio
construction,
investment
platforms,
and
investment
insights
and
reporting,
also
went
down
this
route
for
the
tech
challenge.

It
set
out
to
reimagine
hard-to-read
reporting
formats
with
an
engagement
touch,
so
that
investors
would
be
able
to
not
just
read,
but
also
understand
the
content.
To
do
this,
the
company
used
a
storytelling
format,
mixed
with
AI
and
natural
language
processing,
to
break
down
financial
reports.

In
the
showcase,
InvestSuite
explained:

“When
you
open
a
Storyteller
report,
you’re
not
just
reading
numbers,
you
are
embarking
on
a
journey.
Like
any
great
story,
every
report
has
its
heroes
and
villains.
We
guide
you
through
the
rising
action,
painting
a
vivid
picture
of
your
portfolio’s
performance.
Through
news,
deep
look-throughs,
and
fresh
perspectives,
your
report
becomes
more
than
a
simple
update.
It’s
a
thrilling
narrative
that’s
both
insightful
and
engaging.”

The
tool
also
incorporates
ESG
and
impact
data,
available
on
various
devices,
and
in
video
format.

Runners-up
MoneyHub
and
R2
also
presented
their
solutions
at
the
Morningstar
Investment
Conference
Showcase.

Speaking
to
the
adviser-heavy
audience,
MoneHub’s
managing
director
Vaughan
Jenkins
explained
one
of
the
key
concerns
for
advisers
looking
to
fulfil
their
consumer
duty
obligations.

“There
is
no
shortage
of
content
out
there,
there’s
a
shortage
of
attention
and
there’s
a
shortage
of
patience
amongst
clients,
and
there’s
a
shortage
of
time,”
he
says.

“And
you
will
be
judged
against
the
best
customer
experiences
they
find
out
there.”

Moneyhub
created
a
one-stop
dashboard
view
of
investments,
tracking
suitability,
affordability,
eligibility,
and
vulnerability.
The
platform
is
also
able
nudge
client
and
adviser
to
course
correct
if
the
current
investment
style
seems
like
a
mismatch.

Meanwhile,
2R
Squared’s
solution,
was
developed
to
improve
information
flow
across
the
business
to
allow
front
office
to
better
serve
the
end
customer.
Founding
director
Rajesh
Amin
explained
this
will
allow
the
client
and
coverage
person
to
have
interactive
conversations
and
adjust
portfolios
for
bespoke
objectives,
taking
into
account
historical
data,
forward
projections,
ESG
considerations
and
goals.
It
also
allows
for
real-time
comparison
between
current
strategy
and
any
changes.

The
Debrief

Commenting
on
the
results
from
the
Tech
Challenge,
Keith
Phillips,
Executive
Director
of
PIMFA
WealthTech,
says
the
role
technology
can
play
in
helping
firms
meet
the
new
requirements
of
the
Consumer
Duty
and
serve
their
clients
better
has
the
potential
to
be
enormous.

“We’re
delighted
to
be
working
with
Morningstar
on
this
important
Tech
Sprint
and
invite
fintechs
that
work
in
this
space
to
participate
and
show
the
wealth
management
industry
the
type
innovation
and
support
they
can
offer,”
he
says.

Anastasia
Georgiou,
Morningstar’s
director
of
client
solutions,
advisor
segment,
EMEA,
says
these
solutions
could
be
pivotal
to
helping
the
industry
find
new,
innovative
ways
of
communicating
with
customers
to
help
them
understand
financial
products
and
services.

“Morningstar
is
the
principal
strategic
partner
to
PIMFA
WealthTech
and
together.
The
joint
‘Tech
Sprint’
series
has
been
designed
to
address
common
issues
within
the
wealth
management
sector
where
a
technology
solution
could
offer
the
most
effective
solution
for
all
parties”,
she
says.

“The
Consumer
Duty
sprint
is
the
first
in
this
series
and
was
designed
to
examine
how
customer-focused
technology
can
be
best
deployed
to
support
the
needs
of
wealth
managers
within
the
requirements
of
Consumer
Duty.”

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