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A Guide to Fintech
INTERNATIONAL INVESTMENT and deVere group present
REPOSITIONING LABUAN IBFC
Welcome to this short digital guide to fintech and how the use of technology has helped financial advisers amid the ongoing covid-19 pandemic. In the world of international financial advice, a new move towards face-to-face advice via phone, tablet and computer screens, rather than in real life has seen some companies thrive and prosper as advisers and their clients adapt. These have been and continue to be strange and often surreal times. In an exclusive interview, I also posed questions to deVere Group founder and CEO Nigel Green relating to how has the company coped during the covid-19 global pandemic and whether an investment and focus on fintech has given the company an edge as the world of financial advice has changed throughout 2020. In the interview Green points that the world is becoming increasingly tech-driven and how, as such, tech will continue to play a more dominant role in financial advice and financial services more generally over the next few years.
Advice goes digital
International Investment’s Gary Robinson introduces this Guide to Fintech
The changing world of financial advice
IN THIS GUIDE
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Gary Robinson
Commercial Director, International Investment
INTRODUCTION
In this guide International Investment’s editor-in-chief Christopher Copper-Ind gives an overview of fintech’s evolution in international financial services and what will the future might hold. Looking at how blockchain can also play a big role in many of these areas, ensuring both security and transparency, Copper-Ind points that the same sector that gave a startled world its first hole-in-the-wall cash machine is, any moment now, about to ping you an update on your ESG portfolio.
INSIGHT
Christopher Copper-Ind gives an overview of fintech’s evolution and what the future might hold
VIDEO
James Green of deVere Group discusses technology in the time of covid-19 and the future
deVere Group founder Nigel Green answers questions on the company's attitude to technology
INTERVIEW
Click here to take part in our short survey
In the interview Green points that the world is becoming increasingly tech-driven and how, as such, tech will continue to play a more dominant role in financial advice and financial services more generally over the next few years. Finally, we are asking you, our readers, to take part in a special fintech survey (see link below) Thank you for reading and viewing this digital publication and stay safe throughout 2020 and beyond. Gary Robinson, Commercial Director, International Investment
In the video interview enclosed in this guide, deVere Group’s divisional manager for Europe, James Green, gives an insight into ‘the new normal’ of financial advice, including a jokey but revealing tale of how his company offices have changed with advisers taking over the broom cupboard for client zoom-style interviews. As for the brooms, mops and buckets? In recent times they have been sat, pride-of-place in the deVere London headquarters reception, with clients not likely to be visiting any time soon. Finally, we are asking you, our readers, to take part in a special fintech survey (see link below) Thank you for reading and viewing this digital publication and stay safe throughout 2020 and beyond. Gary Robinson, Commercial Director, International Investment
GR: Speaking generally, how has fintech changed financial services in the last five to ten years? NG: The financial services sector is currently undergoing, I believe, possibly the most profound transformation in history. This is being driven by fintech, which is reshaping the sector in fundamental ways. Most traditional financial services firms were monumentally caught off guard by the 2007-2008 crash. As they went into survival mode and re-grouped, fintech providers started to move in and are filling the void left between what traditional financial services companies are offering and what customers are now expecting, especially in terms of customer experience. Fintech is already the ‘new normal' as we increasingly insist on immediate, on-the-go, 24/7 access to, use and management of our money. We demand personalised, on-demand services and lower costs.
'Welcome to the new normal’
With more than a dozen apps in the international financial services and as the current holder of the ‘International Investment Award for Fintech Innovation’, it is no surprise to see deVere Group continue to champion the use of financial technology now and for the future. But how has the company coped during the covid-19 global pandemic? And has this investment and focus on fintech given the company an edge as world of financial advice has changed throughout 2020? International Investment’s Gary Robinson posed the questions to deVere Group founder and CEO Nigel Green to find out more…
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'By embracing fintech early on we have kept well ahead of all major competitors in our sector. It clearly demonstrates that we’re a forward-thinking, pro-active organisation with the resources to back up our ambitions'
GR: You set out your stall early on by embracing technology. How has that impacted on business? NG: By embracing fintech early on we have kept well ahead of all major competitors in our sector. It clearly demonstrates that we’re a forward-thinking, pro-active organisation with the resources to back-up our ambitions. It shows clients we continually invest in products that they demand to help them reach their long-term financial goals. It also helps to attract and retain the industry’s top talent.
Nigel Green
CEO and founder, deVere Group
GR: Why has deVere invested so heavily in this area? And what sets the company apart from the competition? NG: DeVere is one of the very few financial advisory organisations that has been actively pushing into fintech and is now widely regarded as one of the leaders in the sector. We invested heavily – and continue to do so – because we recognised early on that fintech is the future of our industry and to meet existing and future client demand.
GR: You have a number of apps. Why so many? And how have they been embraced by users? NG: Over the last three years, the company has developed and rolled out a suite of ground-breaking fintech apps. These include deVere Vault, a global e-money currency app and multi-currency prepaid card; deVere Crypto, a cryptocurrency app to store, transfer and exchange major cryptocurrencies, including Bitcoin; deVere Core, an app that allows clients to monitor their investments in real-time on-the-go, keeping them informed with news and events that impact investor returns; and deVere Catalyst, a low-cost investment and savings app that offers best-in-class globally diversified funds. More recently, we launched Ident Me. This pioneering app provides a secure identity verification system – as an alternative to traditional customer onboarding – and a notary services function when required, which is a first for the international financial services and fintech sector. All our cutting-edge apps are designed solely with our clients in mind and they have fully embraced them as they help them achieve their financial ambitions.
GR: By using tech and other innovations deVere is more than an international adviser firm these days. Does increased technology mean advice is a diminishing more specialised art? NG: We remain one of the world’s largest independent financial advisory organisations, but now we’re also globally acknowledged as a main leader in the fintech sector too.We believe that clients want a combination of personal advice and innovative digital solutions to help them achieve financial security and financial freedom.
GR: How has covid-19 impacted on deVere's business so far and how has technology helped? NG: We moved quickly and effectively at the start of the pandemic, which has been essential in allowing us to continue to provide the highest quality of service to our clients around the world. Technology has enabled us to do this without disruption. A major global workplace revolution has taken place this year. Our teams are now more flexible in that some prefer to work remotely, fully or as part of a hybrid team, whereby there’s a mix of onsite and home work. GR: How do you see technology impacting further on financial advice and financial services into 2021 and beyond? NG: The world is becoming increasingly tech-driven and, as such, tech will continue to play a more dominant role in financial advice and financial services more generally over the next few years. There’s no going back to the old ways of doing things. Fintech is the future of our industry.
GR: In a post-covid world are we finally ready for AI and robo advice to really take off? NG: There will certainly a place for it, but there will always be a demand for bespoke financial advice, especially for high-net-worth and ultra-high-net-worth individuals. GR: And, finally, I think I remember you once said that you wished that you could clone yourself. Given the possibilities with AI, Virtual Reality and Augmented Reality, could we expect to see a virtual computerised ‘super adviser’ with, say, a virtual Nigel Green dishing out advice into the future and beyond? NG: Anything is possible! We think big at deVere and back it up with action and results.
'The financial services sector is currently undergoing possibly the most profound transformation in history'
The story of financial technology could plausibly be seen as beginning with the laying of the first transatlantic cable in 1866, but most consider the era of fintech to have properly emerged in the 1960s. Barclays installed the first ATM in 1967. The first pocket-sized calculator went on sale in 1971 (interestingly, the first use of the word ‘fintech’ was recorded in the same year, although its use didn’t become widespread until the 2000s). And the worldwide SWIFT mechanism for cross-border transfers was established in 1973.
Past, present and future
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Bitcoin, the world’s first cryptocurrency, emerged in its first incarnation in 2009, built on the Blockchain encrypted ledger technology whose potential for underwriting rock-solid secure transactions has yet to be fully realised. In 2010 a single unit of the nascent currency was worth just $0.08. Today one Bitcoin is worth just shy of $11,000 (and, at its 2018 peak, almost $20,000). It wasn’t until 2018 that HSBC undertook the world’s first blockchain-based transaction. HSBC said, “The need for paper reconciliation is removed because all parties are linked on the platform and updates are instantaneous.” Two years on and a world in covid-19-induced lockdown entered a tech-enabled revolution. The financial services industry, along with many other sectors, found itself working from home in what many see as a permanent change to the way we work.
'In 2010 one Bitcoin was worth $0.08. Today a single unit is worth just shy of $11,000'
Although its roots go back much further, in many ways fintech as we know it today can be seen as a child of the financial crisis. In the 12 intervening years, fintech has evolved from being a peripheral play-thing of start-ups to the towering central pillar of the world’s mighty financial services industry. How it got here, and where it is going, is the subject of this article. There can be little doubt that the covid-19 pandemic has already brought fintech firmly into the everyday lives of millions of people around the world, rich and poor.
Happily for financial services, the tech boom proved much more resilient than the dotcom bubble, and coincided with the near-saturation of the smartphone market. This meant that financial services firms could, for the first time, quite literally provide clients with their investment updates or pension portfolio performances with a swipe of a finger. In many cases entire sub-sectors have sprung up – or moved entirely – to the smartphone. Think of the rise of mobile payments in Africa on a predominantly unbanked continent or the dominance of China’s WeChat. By 2016, $13.1bn was being invested in venture-capital fintech investments, according to EY.
Article by Chris Corkish, RL360 Investment Marketing Manager
Christopher Copper-Ind gives an overview of fintech’s evolution in international financial services and what the future might hold
Financial services firms now have an app for every service, and often many. Several banks, including Citi and HSBC UK, eagerly foresee a completely digital future, with no physical branches, within 10 years. The pandemic has helped them to prepare the ground for a virtual banking world. The proportion of British people using online banking rose during lockdown to 86% from 79% a year earlier. In Norway the shift to digital reached an impressively progressive 97%. By 2020 many financial services companies, from banks to advisory firms, and family offices to fund managers, already have a plethora of apps and platforms that cater to their and their clients’ needs. In an interview with International Investment, DeVere Group’s CEO, Nigel Green, elaborated on his firm’s extensive fintech offering: "These include deVere Vault, a global e-money currency app and multi-currency prepaid card; deVere Crypto, a cryptocurrency app to store, transfer and exchange major cryptocurrencies, including Bitcoin; deVere Core, an app that allows clients to monitor their investments in real-time on-the-go, keeping them informed with news and events that impact investor returns; and deVere Catalyst, a low-cost investment and savings app that offers best-in-class globally diversified funds."
Where to from here? The future for fintech lies in the blockchain. It forms the basis of all cryptocurrencies and several countries, including China, are working to develop digital versions of their existing, central bank-issued, currencies. Trading in these currencies will probably become commonplace within five years or so. And as HSBC discovered in 2018, blockchain technology offers vastly reduced transaction times, improving both cashflow and security. Artificial Intelligence is also likely to play an ever-greater role in such areas as insurance claims and even financial advice. So-called robo-advice is already a service offered by many established wealth managers around the world.
As we have seen, the era of completely digital banking is almost upon us. There is likely to be ever-greater collaboration between banks and fintech companies as the needs of the all-digital world become clearer. In a recent report on banking and fintech, EY said that in order “to achieve this future state, banks will need to unleash the potential of fintech in their own organizations.” The same can be said of the wider financial services industry. Further integration will bring now-familiar challenges of data protection, security, regulation and information sharing and cross-border finance. Yet blockchain can also play a big role in many of these areas, ensuring both security and transparency. In many ways those will be the watchwords as this brave new world becomes the world of everyday finance. The same sector that gave a startled world its first hole-in-the-wall cash machine is, any moment now, about to ping you an update on your ESG portfolio…
Up, up and away
Fast-forward to the 2010s, and the decade following the financial crisis, and the industry is at all levels an almost fully digital sector. Between 2009 and 2014, fintech as a distinct sector in its own right really takes off. In 2009, according to Deloitte, 54 companies were founded as fintech start-ups. Five years later that number had grown to 232.
Focusing on health & wealth
In this revealing interview – part of the II post-lockdown interviews – James Green of deVere Group speaks about how the company has evolved its business during the covid-19 pandemic and how technology has played its part in shaping how financial advice and services look now and into the future.
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