• October
  • 2021

The Role of Customisation in Designing Premium Wealth Experiences

Customising a product or service has always been an essential attribute of premium customer experiences. Nowadays, it is a powerful brand differentiator in the digital economy; the product suggestions from Amazon, movie recommendations from Netflix and playlist offerings from Spotify drive consumer loyalty and mould customer expectations. As wealth managers move their services online, they face similar demands for fast, user-friendly and individually tailored services.

As it is becoming easier to compare and switch financial service providers, customers exhibit significantly less brand loyalty. A study by PWC found that one in three millennials are open to changing financial services providers in the next 90 days if they find another, more customisable and adaptive solution. The customisability of the customer experience and an ability to deliver a high-quality service are essential for financial institutions in achieving higher customer engagement and retention levels.

Today we are going to talk about technology driving customisability and brand recognition for wealth experiences. OutRank, a financial simulation engine by Kidbrooke, enables financial institutions to provide their end customers with seamless financial decision support tailored to the personal financial situations of their customers at balance sheet level. Furthermore, by incorporating house views, OutRank allows banks, insurers and wealth managers to build their digital offerings faster and affordably while maintaining their brand identity in the decision-making process.

How does OutRank empower customisable experiences?

OutRank consists of three core components. These components are the Economic Scenario Generator (ESG), the Balance Sheet Predictor (BSP) and the Financial Decision Maker (FDM). We will examine each of these components from the perspective of how you can customise OutRank.

The ESG allows financial institutions to model probable future conditions of the global economy and capital markets to inform various portfolio and risk management decisions. It enables a financial institution to consider and calibrate bespoke risk factors depending on the availability of historic market or customer-specific data. Therefore, it allows for granular mapping of your investment product universe, ensuring your customers can match their financial goals with your offerings. In addition, our ESG facilitates the alignment of your institution’s house views with the existing calibration of the ESG-model, making sure your company’s research and projections can be incorporated.

The BSP is an essential part of OutRank responsible for constructing future cashflow trajectories on the balance sheet level. It projects all balance sheet items based on the underlying risk factors generated by the ESG. Thus, the ESG and BSP form a solid base for a wide variety of analytical tools. The BSP includes customisable subcomponents such as tax regimes, fee structures and other rules specific to the positions in individual financial contracts on the balance sheet.

The third component of OutRank is the FDM. It compares different projections or forecasts of the net asset value of the balance sheet described in the request to facilitate end customers’ financial decision-making. This component supports numerous goal functions, which help the end customers select the appropriate strategy to achieve their financial goals. For instance, the financial decision maker considers customers’ attitude to risk and their capacity to bear losses in addition to the characteristics of the goals themselves. OutRank can be tailored to use existing sets of risk profiling questions together with its proprietary risk profiling methodology.

How does customisation help you achieve your goals?

Risk factors, product mappings, house views and goal functions are all customisable, ensuring that you can retain your unique brand identity. Furthermore, from an end-user perspective, the balance sheet predictor enables a 360-degree view of an individual’s economy, powering truly personalised financial guidance and advice capabilities. This way, OutRank will empower you to deliver to your customers relevant, personalised and actionable insights about their financial situation proactively and at request.

So how do the customisable financial experiences created with OutRank help you reach your business goals?

First, OutRank will help ensure a compliant and high-quality service. Since the MiFID II transparency regulations came into force, financial institutions reported a substantially increased workload associated with reporting and administrative tasks. OutRank can automate some of these processes and ensure that the financial advice is in the customers’ best interest. The underlying algorithms achieve this feature by maximising each customers’ unique utility function. In terms of quality, the granular modelling of an end-customer's financial situation and the capability to analyse the entire balance sheet allow you to support the widest possible set of financial decision-making.

Second, OutRank enables financial institutions to achieve drastically shorter time-to-market for new decision-making tools. Since OutRank provides a balance sheet level coverage of the end customers’ financial situation, it can support virtually any use case that requires financial modelling. This feature grants financial institutions strategic freedom to choose the scope and timing of their digital transformation efforts. Thanks to the balance sheet level coverage and API nature, the new digital services are methodologically and technically consistent. Therefore, our customers report saving considerable time on internal discussions regarding compliance, underlying methodology and vendor management when they decide to add additional customer journeys supporting new types of decision-making by the end-customers. For instance, Skandia began its transformation by building a digital pension planning service powered by OutRank. When they expanded this service to include more general investment goals, they significantly reduced their time to market since internal stakeholders were already onboard with the OutRank methodology.

Last but not least, OutRank helps financial institutions achieve their business goals. As we mentioned initially, customisation is significant for financial service providers since there is a strong revenue argument to favour it. Hence, there is a substantial focus on creating a seamless end-customer experience. A Deloitte report found that firms revenue tends to increase after adding another level of customisation. For instance, Amazon and Netflix have derived 35% and 60% of their sales from personalised recommendations, respectively. The more customisable experiences banks, insurance companies and wealth managers can build in a scalable and affordable way; the higher the level of engagement with their customers. OutRank’s high customizability helps financial institutions improve customer engagement at scale and at a competitive cost, ultimately increasing revenue.

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