Boosting Financial Inclusivity: everyoneINVESTED’s survey reveals key insights for UK banking clients
Much like consumers in Italy and France, investors in the UK have similar risk profile patterns, and everyoneINVESTED believes its risk profiling solution could become the market standard.
everyoneINVESTED came to this conclusion after surveying 5,022 UK banking clients, part of a series of European studies. This latest study, which lasted 11 days, saw the participants leverage one of everyoneINVESTED’s digital solutions, providing users with an engaging screenflow that generates multi-purpose client data for customer analysis and cluster profiling. It boasts the ability to fully understand a client’s financial wellbeing and risk profile to help them make informed investment decisions, regardless of their prior experience.
The UK is the sixth market where everyoneINVESTED has conducted this test, with the other most recent tests being conducted in Italy and France. While each country had slight differences, the similarities are far more interesting to Jurgen Vandenbroucke, managing director at everyoneINVESTED.
These similarities are that men are more willing to take risk than women, higher educated people are more loss averse, and willingness to take risk declines as we age. Vandenbroucke was excited by these results because “There’s nothing shocking coming out of it,” he said. While having a survey come out with expected results might not sound like a great result, it is precisely what everyoneINVESTED wanted to see. The reason for this is that the results align with academic research, validating the methodology the company has implemented into its platform and serves as a reference for going forward.
everyoneINVESTED can accurately assess the risk profiles of any users, regardless of their experience investing, with Vandenbroucke noting that most participants in the study had never invested before. The team is so confident in its results that during the studies, it supplied the relevant supervisory authorities with a demo and the investigation results. He said, “They are urging market players, banks, advisory networks and so on, to improve the methods and the contents of their risk profiling. And we truly believe that what we have developed, meets the standards of becoming a market reference.”
The risk profiling solution at the heart of the study is currently LIVE in several jurisdictions and has been presented to ten supervisory authorities.
Main takeaway from the survey
everyoneINVESTED’s study was completed anonymously, but each participant was asked to rate their experience at the end of the process. It asked them whether they liked the flow and interaction of the solution, if they felt it was a productive use of their time and whether they would be willing to share this data with their service provider had that been an option. In every market this study has taken place, everyoneINVESTED received overwhelmingly positive and neutral user ratings, up to 97.5% in the UK.
He added, “We succeed in presenting this in a way that it appeals to people. I must admit, in the back end, it’s quite a boring science-based method, but in the visualisation we use on the smartphone, it succeeds in presenting this in plain language and an easy-to-understand setting.”
The willingness of participants sending their data to service providers is particularly impressive. By accessing this data, firms can provide better services, meeting the increasing demand from clients. It becomes a win-win for both sides. Vandenbroucke said, “Banks are really craving for ways to get information and objective data of their clients for effective lead management and direct marketing.”
However, the value in this data is not exclusively useful to investing products and can be used in a broader context. He highlighted a use case with a bank that is currently using the everyoneINVESTED’s platform with non-investing clients and using the data for more personalised services for other solutions within the bank. A way this could work is that if a customer has a high aversion to loss, the bank might want to offer them a more personalised insurance policy that could better protect their situation.
Consensus on regulations
The new wave of regulation is getting a lot of focus from the market. The UK’s Financial Conduct Authority is very active in the market and is working on various new regulations that will create a sizable change in existing workflows.
One of the most anticipated regulations in the UK is Consumer Duty, which will fully enter into force in July 2024. Some of the notable changes Consumer Duty brings are an expectation to provide customers with timely and clear information, ensure relevant products are offered to customers, customers are given helpful and accessible support, products and services offer fair value and extra support is given to vulnerable customers.
Consumer Duty covers many aspects, one of them is what is called data-based servicing. From now on, it will not be sufficient if an advisor writes a report, “I gave this advice to the client because I genuinely believe it is good for the client.” It should be based on data, e.g., data from our tool, which 5,000 UK citizens have tested and approved.
The EU proposed a similar regulation earlier in the year, ‘Retail Investment Strategy.’
Wealth management firms subjected to these regulations have a couple of options. They could either wait until they have to meet compliance, or they can prepare ahead of time and turn the regulation into a commercial opportunity instead of a budget burden. Vandenbroucke added, “If you wait until the final moment where everything is crystal clear, then you chase your tail by making sure that you comply.” Rather than just waiting for change, firms should embrace the change and embrace technology to ensure their teams are not encumbered. “Seize these business opportunities and look at it from an opportunistic point of view, because marrying those two really makes the effort of investing in digitization rewarding.”
Behavioural aspects
Understanding client’s behavioural aspects influencing their decision-making and preferences, such as their loss aversion, is an integral part of the investment process. It helps wealth management firms understand how a client would like to invest and how well they will deal with fluctuations in the market. Currently, the most common method for assessing this is through an archaic questionnaire process where a customer answers a series of questions.
However, Vandenbroucke noted that financial institutions are now seeking solid methods to improve their loss aversion assessment, but also have it conducted during the onboarding stages. This reduces the time an advisor must complete a simple process with clients, affording them more time to focus on the decision making. everyoneINVESTED’s risk profiling solution provides advisors with all the valuable information they need in a digital format, allowing them to accelerate and improve their decision-making.
everyoneINVESTED’s risk profiling assessments leverage an innovative method that was co-developed with an external academic expert. This method has been tested across various regions and is consistently validated through the studies everyoneINVESTED completes, like the ones in the UK, Italy and France.
One of the differentiators of the platform is that it can be tailored to specific users, such as big banks, neo banks or advisory providers. By being cloud-based, clients can implement the modules they want and use them in whatever combination. For example, one partner bank has replaced their entire risk profiling procedure with the everyoneINVESTED platform, using the services across its mobile app, online and in-branch operations. Equally, everyoneINVESTED has a client that simply uses one of its modules to replace the weakest parts of their existing investor onboarding process.
As the company’s name implies, Vandenbroucke said everyoneINVESTED’s goal is to help boost financial participation. It aims to do this by providing financial institutions with the technology they need to give the customers with a digital-friendly solution that enables impactful investing services. He concluded, “Many clients are not interested in visiting a branch for investment advice. But they all carry a branch in the pockets of their trousers, in the form of a mobile phone. So that’s what we try to do. We get into the life of the unserved audience using in-app integrations and ensure that we do so in a way that encourages conscious investment decisions.”
Find more information about everyoneINVESTED here.
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