Why (and how) the big banks will return to advice

Ignition Advice co-founder Mark Fordree said that Australia’s biggest institutions are beginning to recognise that “if they don’t do something, somebody else will”, with digital challengers racing to meet the general advice needs of millions of consumers.

“In the UK we’ve had a similar situation, there were a lot of vertically integrated businesses that have walked away from advice, but we’ve seen a seismic change in the conversations now,” Mr Fordree said.

“They’ve solved two issues that every fintech is trying to solve: what’s my customer acquisition strategy, and how do I get their data? They’re now looking for solutions that can monetise that existing client base and help them out, because most of those people do need advice. It doesn’t have to be complex, and it can be delivered compliantly.”

The advice tech provider has made significant inroads in the UK and Europe, and in Australia is targeting large institutions that have the technology and scale to fully integrate robo-advice solutions for the “90 per cent” of customers that are going unadvised as a result of the rising regulatory burden and its associated costs.

“We’ve had ongoing conversations with all of the banks here, for many years…they will move at a pace. It’s a matter of priority. Anybody who’s been watching this space for a while knows that they have plenty on their plate,” Mr Fordree said.

Ignition sees digital as being one part of the advice experience, with human advisers remaining integral to servicing consumers who have more complex and pressing needs than what can be met by simple digital advice.

“Once the pendulum goes out and they (the institutions) realise they’ve got a few million accounts and no way of actually giving them any guidance at all about their insurance product, their investment product, their retirement product – what are they going to do?” said Ignition co-founder and chief executive Mike Giles.

“One of the banks said to us ‘we’ll be getting back into advice before we get out of it’.”