I love being asked how Akoni came about because for me to go back to the start, and to see where we are now as a company, and as an industry, I’m proud to see how well the wealth tech industry has begun to embrace a digital customer experience that is graceful and frictionless.

Speaking to David Brear, Group CEO of 11:FS, on his well-renowned podcast, The Breakfast Show, allowed me to discuss my early experiences in the wealth space (including an anecdote from my pre-Akoni years about a Big Four auditor who shall remain unnamed, telling me to take £50 million worth of cash to the local bank due to our company falling into a regulatory gap when I asked for advice), and why the industry needs to innovate. Plus, why there are such huge opportunities in wealth management, the hidden regulatory costs of running marketplace platforms, and how Covid has pushed the wealth sector for the better.

There are huge opportunities to be had in the wealth management space. We are all aware of how powerful data and technology are combined, so we should be able to, in 2020, personalise the distribution of cash.

In the past, managing portfolios was a clunky process, cash would sit in portfolios gathering dust and gain little returns due to the risk-based approach taken by firms. Customers could only see their assets, whether it was property or investments when they would pick up the phone and call their wealth manager. People want to be in control. They want to view their assets in one clean, easy to access place.

I can see that there are several factors for the shift in thinking and change across the wealth tech space.

Covid is the biggest catalyst for change right now across all industries, and for some, in the finance space, it has, unfortunately, had a negative impact. For the wealth industry, I would suggest that it has pushed innovation sooner. Digital management has been ramped up due to social distancing and workplace expectations. Furthermore, risk tools are in high demand so that firms can manage certain risks such as counterparties due to the increased demand for lower-risk assets.
Today, we can see that banks who carry the balance sheets are becoming the product manufacturers and distributors of these wealth management platforms. This is key because the platforms can analyse what the customer wants and needs, and then go to the bank and say that they need to create ‘X’ type of product - and banks are very receptive to this feedback. However, there is a lag time when banks deliver to the market. As a result, you end up seeing a lot of innovation around cash management and cash saving products.
Open Banking is another catalyst for change in the wealth sector. We have seen pension dashboards grow in popularity. Historically, the sector has focused on the accumulation phase, which is where you have built the assets for your retirement. Once you hit retirement, you are in the decumulation stage as you are now utilising those assets, however, there are very few tools to help you manage it. If you’re retired, you’ve paid all your bills and you want to put some cash aside, at Akoni we believe that you should then have a platform that prompts the customer: “You’ve saved 10% ahead of your spending. Consider taking your grandchildren out for a nice dinner with the money in X pot”. This prompt will take a values-based approach that is defined by the customer, as well as the usual risk-based approach by using a range of customer data points.
Lastly, banks are becoming more interested in new wealth management solutions as they recognise that the next generation will not be interested in older systems - they are hungry for cash management tools that include data personalisation, ethical, social and governance (ESG) values-based investment opportunities, and a curated marketplace that will cater to their values and beliefs. Now more than ever before, we can see that wealth is moving hands rapidly. For example, if a 70-year-old mum gave money to their 30-year-old daughter, the money will be used differently as spending habits will vary between different generations - so it’s a smart move to cater to the future as well as to current customers.

That said, it’s always worth remembering that to innovate at scale you do need cash behind you. Customers using wealth management marketplaces expect it to look and feel simple without even questioning that it could be otherwise. Because of this, people rarely recognise (unless you’re in the industry) how costly it is to stay compliant with the strict regulatory standards that surround wealth management.

People in the background are constantly updating sanction lists, maintaining the upkeep of technology, for example - an AML API and continuing ongoing customer checks to ensure that money isn’t being laundered. In my opinion, the maintenance side of wealth tech, with all of the regulatory tape around it is another area that needs updating. Verification between partnering institutions can be very inefficient. Whenever we work with customers we have to ensure that all of our policies match up and that we remain GDPR compliant which takes time and money.

Saying that Akoni’s cash marketplace service continues to thrive, as we reached pivotal moments in the company’s lifespan - with the successful completion of our current investment round, and with an excellent team in place, we have been able to create a revolutionary platform for our retail, wealth management and accounting partners who want to offer a holistic, personalised wealth management experience to their customers.

As always, with sudden change (lockdown triggered by COVID), we saw hiccups with our banking partners who were using manual systems at the start of lockdown. However, we have seen speedy adaption on their part, and I remain hopeful that this is a sign for good things to come for the wider industry adopting technological solutions and socially distanced working.

Being a part of the next stage of growth for the wealth tech sector is exhilarating, it’s a journey I am excited to be a part of along with Akoni, where the team is pushing new boundaries every day. It’s going to be an interesting few years ahead as wealth tech booms and will remain a lucrative space for those willing to push change, and for the customers who will no doubt benefit from this innovation.

You can watch the full interview with 11:FS here. If you want to find out more about Akoni and how we support financial advisors, and the wealth management industry, then visit our website, or you can contact us directly.

About Akoni: Akoni is an award-winning UK cash platform, which provides a marketplace to SMEs and charities, as well as to individuals through our white label distribution partners including IFAs, wealth platforms, accountants and SME hubs. Akoni uses innovative technology to personalise cash planning solutions for clients, and also provides a full API solution to banks and insurance clients.