{"id":62286,"date":"2015-09-30T10:13:43","date_gmt":"2015-09-30T10:13:43","guid":{"rendered":"http:\/\/mostafa.openonline.co.uk\/?guid=9fc1ea9e1a66075e3cc3d75690febf2a"},"modified":"2015-09-30T10:13:43","modified_gmt":"2015-09-30T10:13:43","slug":"speech-our-ambition-is-now-to-be-the-leading-fintech-centre-in-the-world-says-harriett-baldwin","status":"publish","type":"post","link":"https:\/\/mostafa.openonline.co.uk\/?p=62286","title":{"rendered":"Speech: ‘Our ambition is now to be the leading FinTech centre in the world’, says Harriett Baldwin"},"content":{"rendered":"
\n

Good morning, and thank you for that kind introduction.<\/p>\n

I was very pleased to be asked to speak at this event, because since I have been in the role of Economic Secretary, one of my key priorities has been to ensure that financial services are there to help hard-working people, achieve their aspirations at every stage of their lives.<\/p>\n

Whether that\u2019s saving for their first home, taking out a mortgage, buying a car, or saving and investing for the future.<\/p>\n

Being able to get the right financial advice is an integral part of that help.<\/p>\n

The UK is very fortunate to have a financial advice market where customers benefit from both well-regulated and high quality advice.<\/p>\n

But the problem is that it\u2019s also often expensive. In a survey carried out this year by Unbiased, the average hourly rate for professional, regulated advice was \u00a3150. And, as you will know, an hour is typically the length of time an advisor will need to spend simply clarifying the customer\u2019s needs, objectives and financial situation. So a complex application will take much longer than that.<\/p>\n

This tends to make regulated financial advice the province of those people with a lot of money to invest.<\/p>\n

For instance, the majority of respondents to a Mintel survey stated that they would seek professional advice for an investment above \u00a350,000 \u2013 but probably not for lower amounts.<\/p>\n

So my challenge today is as follows: is it possible to provide a similar level of service to help those with more modest incomes and savings \u2013 i.e. the vast majority of people in this country?<\/p>\n

Well, guidance services, such as Pension Wise, have done important work in closing the advice gap. We\u2019ve brought financial education onto the National Curriculum, which should also help on the basics. And charities have also done excellent work in this area.<\/p>\n

But I believe there is also a real opportunity opening up for the advice industry here \u2013 and that technology makes it possible.<\/p>\n

The exciting thing about \u201crobo-advice\u201d \u2013 a service which uses algorithms to help customers choose financial products tailored to their particular savings goals and risk preferences \u2013 is that is has the potential to be much cheaper and quicker than face-to-face financial advice.<\/p>\n

Not only that, but it\u2019s also the kind of quick and simple online service we\u2019re using elsewhere in our daily lives \u2013 and which many in the millennial generation see as standard procedure.<\/p>\n

The data available to robo-advisers can also be used to target messages to customers at key points, in order to have the greatest impact.<\/p>\n

Robo-advice shouldn\u2019t aspire to be simply a way of commoditising financial advice; it should be used to make advice better.<\/p>\n

Of course, there will always be a place for personal relationships in financial advice. So-called \u201ccyborg advice\u201d, for example, combines the best aspects of traditional face-to-face advice with the capabilities afforded by new technologies.<\/p>\n

The point of technology is simply to help existing providers improve the services they offer \u2013 and put those services within the reach of new customers.<\/p>\n

Look, for example, at \u2018Nationwide Now\u2019, which uses a fast, high-definition video link to enable customers to interact with consultants as if they were in the same room. They even offer you a cup of tea or coffee!<\/p>\n

That makes a big difference to customers \u2013 and branches \u2013 in remote areas, though you wouldn\u2019t necessarily call it robo-advice.<\/p>\n

What matters is the outcome: in this case, that the customer receives the service they need without travelling all the way to the nearest available consultant.<\/p>\n

Examples like this demonstrate how digital and traditional services can work in harmony \u2013 by using technology in innovative ways, and combining the best of the old and the new.<\/p>\n

But as this new technology comes onto the market, we clearly need to make sure that the statutory landscape is appropriate \u2013 and that Government strikes the right balance between regulating the marketplace and knocking down barriers to entry.<\/p>\n

In particular, I\u2019m aware that there are firms that have developed new cheaper models of advice, but feel that regulatory issues prevent them from taking these to market.<\/p>\n

I hope I won\u2019t be too indiscreet when I say that one leading company told us that if they wanted to enter the online advice market, in order to comply with current regulation, their survey would have to ask 247 questions!<\/p>\n

That is why we are reviewing the advice landscape, and launching the Financial Advice Market Review \u2013 FAMR for short \u2013 to report by Budget 2016.<\/p>\n

We have specifically charged FAMR with examining the opportunities and challenges presented by new and emerging technologies to provide cost effective, efficient, and user friendly advice services.<\/p>\n

It will also:<\/p>\n