Now that the banking Consumer Data Right kick-off date has passed, advisers are getting their head around the tangible benefits of the attached technology and the products they can leverage in their business.

At the start of the financial year the four major banks made data on all available products available to advisers as part of the CDR rollout. July 1 marked the final date for major banks to comply with the rule, while smaller banks have another year to do the same.

For many advisers struggling to deal with the pandemic, market volatility and massive regulatory upheaval, open banking has been on the periphery. Some early adopters have tapped into portals that link them up with clients’ baking accounts, superannuation funds and insurance policies, yet many advisers don’t know what the technology can do.

According to Emily Chen, wealth management executive at Iress, the answer is two-fold.

“The first is the client engagement process, being able to have deeper and more valuable conversations about cashflow and goals,” Chen says. “The other side is the data piece… you can track so much information and see so much more detail.”

At a practice level, open banking gives oversight into areas of a client’s financial life that were previously difficult for advisers to reach. At the onboarding phase this obviates some of the more prosaic information gathering elements of the fact find. On an ongoing basis, advisers won’t need to rely on the client for updates on spending and other miscellaneous policy and account activity.

“Think about that fact find,” Chen says. “It’s very much a manual process to figure out a customer’s spending habits. This will really disrupt that early stage of the client relationship and lead to more meaningful conversations.”

Katriel Warlow-Shill, an adviser at Verdure Financial Planning Solutions in Melbourne, says he’s unlocked another benefit of open banking by developing a platform that provides a universal insurance datafeed to advisers.

Katriel Warlow-Shill

According to Warlow-Shill the platform provides a hub to access all the insurance policies linked to a client. He says he used developers to get the project off the ground and already has 100 advisers using the platform.

‘There are lots of systems that have investment datafeeds but nothing on insurance,” he says.

Warlow-Shill’s platform – called Client Database Management (CDM) Systems – is an example of the benefits open banking can provide beyond tracking spending on bank accounts.

“If my client has three policies with different insurers I don’t have time to log onto three different system,” he explains. “This way I simple information on what insurance my clients have in one place up to date all the time with no errors.”

Not a new service

Chen has a few warnings about the promise of open banking in advice. For a start, she says, the ongoing benefits are only fully realised if you use it properly.

“It’s not getting not just the data but the insights into the data,” she explains. “Data is all the rage but it’s about the insight provided and how valuable that is in the advice setting.”

Open banking won’t be for everyone, Chen says, as some clients will be reluctant to part with further granular information. “It gets real when the advisers can see the spending,” she says.

Warlow-Shill makes the point that while open banking can streamline the advice process, its effect will always be limited.

“Open banking might make the advice process quicker but it won’t change the fundamental of what we do and how we help our clients,” he says. “We still need authorities from the client as well.”

Chen, too, says the technology shouldn’t be treated as something it’s not.

“I see open banking as a value-add, not the creation of a separate service,” she says.

Tahn Sharpe is a Sydney-based financial services journalist with a background in financial planning. He writes on advice, superannuation, investment, banking and insurance issues, is a certified SMSF Adviser and holds an Advanced Diploma of Financial Planning. Contact at tahn.sharpe@conexusfinancial.com.au
Leave a comment