www.tisa.uk.com 1
OPEN FINANCE CONFERENCEA Digital Revolution reshaping UK Financial Services
Monday 18th November 2019
Lead sponsor
Kindly hosted by
www.tisa.uk.com 2
Opening remarks from TISA
David Dalton-Brown, Chief Executive Officer, TISA
www.tisa.uk.com 3
Open Finance
• The ability for consumers to have full access to their financial data so as to take greater
control of their Financial Well-Being.
• Covers all aspects of Financial Well-Being : Health and Wealth
• Made possible through the introduction of:
• Open standards and APIs.
• Supporting Trust Framework - Consumer Consent, liability management, standards & regulatory
permissions for trusted parties.
• Required regulatory and legal developments
www.tisa.uk.com 4
Open Finance – FDATA Definition
“Open Finance” describes the process whereby a financial services customer can choose to enable Third Party Providers (TPPs) to offer products and services by compelling current providers of financial services to share access to the customer’s financial data. Some of
the services provided by TPPs may be competitive to existing financial service providers.
The Genesis Of Open Finance
Eduardo Martinez Barrios - Head of Open Banking Product
London, 18th November 2019
1967
First world ATM in
London.
2
1980s
Introduction of online
banking services.
1999
Beginning of mobile
banking.
2018
Open Banking APIs
7
8
C u s t o m e r
a d o p t i o n
T P P
f u n n e l
B a n k s
p r e s e n c e
O p e n B a n k i n g s t a t e o f p l a y | S e p t e m b e r 2 0 1 9
1.45%
+49M
61 | 50
290
Open Banking adoption rate TPPs with an App offering
TPPs with a prototype
Digitally active customers across the CMA9 Banks
TPPs applied for Open Banking
26
79
Banks active in Production
Total non-CMA9 Banks in Open Banking
9
Estimated UK’s Open Banking-
enabled services opportunities annual
value*
£18 billion
Global eWallet payments
estimated in 2018
Forecasted to grow up to
47% by 2022 **
36%UK smart phone penetration
rate by 2016 †
81%
Third party providers currently
in the process of registration
290
(**) Source Worldpay: Global Payments Report Digital 2018 (†) https://www.deloitte.co.uk/mobileuk/assets/pdf/Deloitte-Mobile-Consumer-2016-There-is-no-place-like-phone.pdf
(*) Consumer Priorities for Open Banking: Faith Reynolds & Mark Chidley
K e e p i n g m o m e n t u m
10
Open Finance
Open
Savings &
Investments
Funds
Trading &
Settlement
Electronic transfer
of Assets
Pensions
Dashboard
Digital ID Open
Banking
££
▪ Technology leverage
▪ Security framework
▪ Trusted ecosystem
▪ Collaboration spirit
Change
Management
Foundations
Scope maturity
Costs
▪ Technology pace is faster than public’s
appetite to adopt new features
▪ Consolidated use cases available
through TPPs
▪ As-Is Ecosystem implications and
transition to new dynamics
▪ Coexistence with parallel regulation
▪ Functionality and specifications
definition aligned with attractive use
cases for the ecosystem
▪ Realistic roadmap: fit for purpose
delivery
▪ High investment commitment
▪ Challenging financial/resource
requirements for smaller
participants
▪ Sustainable investment
Open
Finance
11
U K ’s O p e n B a n k i n g i m p l e m e n t a t i o n l e s s o n s l e a r n e d
Our purpose is to help people
and business prosper.
Our culture is based on believing
that everything we do should be:
Thank You.
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Impact of Open FinanceAdvisers, Providers and Business Models David Dalton-Brown, Chief Executive Officer, TISA
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Content
• Industry Models – past evolution of consumer engagement
• Industry Models – future evolution of consumer engagement
• Some case studies of future consumer engagement models
• Winners and losers
• Next steps for your business
Past evolution of consumer engagement
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Pre-2000 – before the emergence of online platforms
Consumer✓ Consumer has direct relationship with product providers✓ Providers manage the consumer relationship✓ Consumer makes phone / postal request for data✓ Data provided in company specific, paper report✓ Consumer has to prepare own consolidation of data✓ Transactions by paper and cheques taking weeks to complete
Product Provider - ISA
Product Provider - ISA
Product Provider - Pension
Product Provider - Pension
Product Provider - GIA
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Pre-2000 – before the emergence of online platforms
Consumer
✓ Consumers with an adviser (only 8% of consumers) instruct an adviser to collect their product data – letter of authority
✓ Data provided to adviser in company specific, paper report
✓ Adviser has to prepare own consolidation of data (some limited back office support)
✓ Transactions by paper and cheques taking weeks to complete
Product Provider - ISA
Adviser
Product Provider -
Investments
Product Provider - Pension
Product Provider - Pension
Product Provider - GIA
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Post-2000 – The emergence of online platforms
Consumer
✓ Platforms consolidate consumers product holdings
✓ Data provided to consumers and adviser in common digital format
✓ Platforms provide product wrappers, open architecture fund solutions, modelling tools etc.
✓ Transactions are online and asset transfers (in wrapper) in-specie by paper and cheques taking weeks to complete
Product Provider - ISA
Online Platform
Product Provider -
Investments
Product Provider - Pension
Product Provider - Pension
Product Provider - GIA
Adviser
…
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Post-2005 – Online platforms become the norm
Consumer
• Platform consolidates assets into its own ISA, GIA and Pension Wrappers
• Traditional non-platform, product providers are removed from market through consolidation by platform
• Fund managers are disintermediated from the consumer (Via Platform D2C or Adviser Relationship)
Product Provider - ISA
Online Platform
Product Provider -
Investments
Product Provider -Pension
Product Provider - Pension
Product Provider - GIA
Adviser
X X X X X…
Platform Wrappers – ISA, GIA, Pensions, Bonds,
Open Architecture Funds, Equities, Cash
Adviser Back-Office Providers
Future evolution of consumer engagement
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Open Finance – Stage 1 – Evolving central consolidation model
Consumer• Platforms provide full picture
of consumers on and off platform assets and debt
• Consumer gets full picture of their financial position
• Advisers are able to provide improved / complete services at lower cost
• Off platform providers are further disintermediated by platforms – further loss of consumer contact
• Platforms extend the services and product offeringsBanks – for
cash holdings
Online Platform
Off Platform Pensions
Off Platform Investments
Lenders –Secured /
Unsecured Debt
Adviser
…
Platform Wrappers – ISA, GIA, Pensions, Bonds
Open Architecture funds, Equities, Cash
Open Finance Standards / APIs
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Open Finance – Stage 2 – Emerging / potential models
Some potential examples:
• Existing Fintech personal finance providers (Moneybox, Money Dashboard…) and online banks (Monzo..) embrace Open Finance to provide personalized financial consolidation services coupled with simple guides to managing personal finances.
• Leading advisers embrace Open Finance to build personalised consolidation services for their client base and then partner with wrapper providers and institutional trading services to provide an adviser own platform service.
• Back office providers (Intelliflo…) embrace Open Finance and provide complete consolidation platform service to advisers and consumers.
• Next generation Fintech emerges that offers complete consumer and adviser consolidation services replacing existing centralized platform providers.
• Existing traditional product and investment providers adopt Open Finance to develop new retail consumer services – they push back against disintermediation.
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Stage 2 - Fintech provider – virtual platform/aggregated holdings
Web SiteVirtual platform –
aggregating all assets together and
transacting via Central client bank account
Asset Provider 1
Existing Platform Providers
Pension Provider
Term Deposit
With Profits Fund
Asset 1
Asset 2Consumer
Gives consent to trusted partner to collect all their financial holdings
• Aggregated holdings• Transactional information• Performance• Transact via Open Finance
APIs
Bank Account
ISA Provider
Asset X
Asset Y
Open Banking
API
Standard OSI API to Asset
Providers
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Open Finance Stage 3 – The emergence of the consumer led market UBERisation of Retail Financial Services
Trusted Open Finance Partner
Consolidated view of existingAssets & Debts
Risk profile
Consumer Health & Wealth Goals
ExistingProvider
Existing Provider
Existing Provider
Consumer
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Open Finance Stage 3 – The emergence of the consumer led market UBERisation of Retail Financial Services
Open Finance Provider 1
Open Finance Provider 2
Open Finance Provider 3
Open Finance Provider ?
✓ These are my Goals✓ These are my Assets✓ These are my Debts• Meet my Goals?
Trusted Open Finance Partner
Consolidated view of existingAssets & Debts
Risk profile
Consumer Health & Wealth Goals
ExistingProvider
Existing Provider
Existing Provider
Consumer
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Open Finance Stage 3 – The emergence of the consumer led market UBERisation of Retail Financial Services
Open Finance Provider 1
Open Finance Provider 2
Open Finance Provider 3
Open Finance Provider ?
✓ These are my Goals✓ These are my Assets✓ These are my Debts• Meet my Goals?
Trusted Open Finance Partner
Consolidated view of existingAssets & Debts
Risk profile
Consumer Health & Wealth Goals
ExistingProvider
Existing Provider
Existing Provider
Consumer
Potential Impact of Open Finance on Advisers, Provider and Current Business Models
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Open Finance – arrival of new personalised consolidation servicesHow could business models of centralised platform consolidators evolve?
Consumer
Banks – for cash holdings
Online Platform
Off Platform Pensions
Off Platform Investments
Lenders –Secured /
Unsecured Debt
Adviser
…
Platform Wrappers – ISA, GIA, Pensions, Bonds,
Open Architecture funds, Equities, Cash
Open Finance Standards / API
?
• Platforms further focus on improved services to advisers –retain the advice relationship
• Platforms develop white label solutions for advisers
• Platforms launch next generation retail personalised consolidation service and provide introductions to advisers / introduce their own advice and guidance services
• Platforms embrace full range of Open Standard and APIs and become service providers for all traditional providers….
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Open Finance - Some options for current product & investment providers
• Embrace Open Finance – partner with platforms who have adopted Open Finance
• Leverage platforms investment in Open Finance
• Consolidate all legacy holdings with platform partner
• Accept that business in now an institutional / disintermediated provider
• Embrace Open Finance - bypass the platforms
• Establish new consumer / adviser engagement model
• Design products to support Open Finance
• Evolve Distribution and Administration Systems to include use of Standards / APIs
• Maintain current model and acknowledge potential impact – further disintermediation
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Open Finance - Some potential options for advisers
• Embrace Open Finance – partner with platforms who have adopted Open Finance
• Leverage platforms investment in Open Finance
• Consolidate all holdings of existing clients with platform partner
• Develop advice model to cover all consumers life goals
• Embrace Open Finance - bypass the platforms
• Partner with Open Finance Fintech developer
• Partner with back-office provider who has embraced Open Finance
• Adopt a white label Open Finance solution
• Develop advice model to cover all consumers life goals
• Maintain current model and acknowledge potential impact
Winners and losers
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Open Finance – Potential winners and losers
• Winners:
1. Those closest to the consumer have the best range of proposition options and ability to optimise ROI
2. Having consumer financial well-being at the centre of your proposition planning will keep your business relevant
3. Embracing Open Finance provides the foundations for staying close to the consumer and for understanding consumers financial well being needs
4. Those prepared to disrupt their business models – Open Finance is a disruptive development
• Losers:
1. Those not above
Next steps for your business
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Next Steps
• Remember Open Finance could be mandated by government / regulators – Open Banking and Pension Dashboard are already mandated
• Consider / assess strategic options – be in a leadership position through knowledge
• Speak to your customers – understand their views on digital engagement – how does Open Finance support your customers needs
• Engage with industry projects (Open Banking, Open Savings & Investment and Pension Dashboard ) to help shape industry development of Open Finance
• Consider partnership opportunities that support your digital consumer engagement model
• Consider the digital customer propositions that support your engagement model
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TISA’s Open Savings and Investment Project includes participants from all areas of the Financial Services Community
TISA are extending the current steering committee – to a maximum of 20 member firms
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THANK YOU
www.tisa.uk.com
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Opportunities for consumer – the consumer perspectiveHarry Weber-Brown, Digital Innovation Director, TISA
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What is it?
Open Finance refers to the potential for financial services providers to enable consumers to better manage their money and access the right products and services at the right time.
It enables consumers to own and control their data, in an environment that provides for safe and ethical re- use by other financial services providers and with informed consent.
Background
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Background
The UK population is not saving enough:
14.4 million working age adults in Britain are not saving at all and 26.5 million working age adults in Britain do not hold adequate asset balances in either rainy day or pension savings.
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Background
The UK population is not saving enough:
14.4 million working age adults in Britain are not saving at all and 26.5 million working age adults in Britain do not hold adequate asset balances in either rainy day or pension savings.
One in seven UK pensioners currently living in poverty.
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Background
The UK population is not saving enough:
14.4 million working age adults in Britain are not saving at all and 26.5 million working age adults in Britain do not hold adequate asset balances in either rainy day or pension savings.
One in seven UK pensioners currently living in poverty.
Low levels of liquid assets is also associated with poor psychological wellbeing
(The Social Market Foundation, August 2017)
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The current situation
When households do save, they are not making the most of their money:
70% people in Britain hold no medium to long-term assets
6.8 million people hold more money in cash assets than they require to cover their rainy day needs
£200billion held in held in cash accounts in excess to rainy day
(Source: The Social Market Foundation, August 2017)
Opportunities for consumer
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Opportunity
• It is not just the amount of saving that households undertake, there is a a critical issue with the behaviour of those who save, which is a bias for “riskless”.
• Some 85% of savers say that rates of return (interest rates) is an important factor in making savings and investment decisions
• Providing an aggregated view of assets and liabilities allows savers to view and plan their financial position across their immediate needs, rainy day funds and longer term saving for retirement.
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Case Study – Quicken Loans Application
1) Quicken Loans turned the US mortgage industry on its head with the introduction of Rocket Mortgage, an online mortgage application that takes less than 10 minutes to complete, in November 2015
a) The goal was to allow a person to get a mortgage or re-mortgage their home while standing in line for a cup of coffee.
b) Its product simplified the mortgage process by offering a clean and quick online application form, allowing online information verification, and providing conditional preapproval within minutes.
c) In 2017, Quicken became the largest US residential mortgage provider by volume, surpassing Wells Fargo
2) The company leverages technology to retrieve information real time through secure API’s from:
a) Financial institutions (banks, platforms etc) to confirm assets
b) Credit agencies to confirm status
c) Employers to confirm both employment status and income
d) Real estate data on the intended purchase/remortgage
3) This allows the application to provide an instant mortgage if the consumer pass the eligibility criteria as traditional mortgage providers, but without the need for the consumer to provide all the physical evidence
Apply Declaration Check Approved Choose
Consumer Vision + Proposition
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TISA project: Open Savings & Investments
Open Savings and Investments will provide a common set of open standards and APIs to allow customers to share their data between firms.
It will be the fundamental building block to achieve the future digital marketplace for financial services.
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What is the user need (Pension Dashboard)
High level user need
“I need to know how much money I’ll have to live on when I retire so that I can plan for my future”.
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What is the user need (Pension Dashboard)
Additional user needs
“I need to know that the information will be displayed in a clear and easy to understand way, as I am already confused by current pension information and this may put me off from logging on”.
“I need to know that the service is secure and that my information is safe and protected so that I am reassured other people cannot see and access my financial information”.
“I need to know that I am accessing the correct service provided by one impartial and reliable source so that I’m reassured I can trust the guidance and information I am given”.
Benefits
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What value can Open Finance deliver to the consumer
Remove the perceived and/or actual difficulty in managing multiple financial products across different providers that results in low levels of customer engagement.
Opportunity for consumers to reduce the time and effort required to manage their finance
Opportunity to enable consumers to make better informed decisions based on having a single view of their full financial position in a single place.
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What value can Open Finance deliver to the consumer
Remove the perceived and/or actual difficulty in managing multiple financial products across different providers that results in low levels of customer engagement.
Opportunity for consumers to reduce the time and effort required to manage their finance
Opportunity to enable consumers to make better informed decisions based on having a single view of their full financial position in a single place.
Ability to easily compare the returns on money and make decisions - move money at the appropriate time
Assist consumers and advisors with the completion of various forms or returns (e.g. tax return, mortgage application).
Enable improved access to advice and guidance and to help consumers to make better financial decisions
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Consumer Benefits
• At the consumer level benefits come in many forms; however the key benefit is in allowing them to have complete pictures of their overall wealth .
Category Benefit
Consumer Engagement Simplification of experience
Consumer Engagement Ownership of personal data.
Consumer Engagement Facilitates more effective financial planning - both self-directed and
advised
Improved customer
decisions
Auto prompts to clients. E.g. would you like to invest your bonus
payment?
Costs & Efficiency Reduction in costs due to competitive pressure in the market
Consumer Education Better education personalised on total asset holdings
Service Propositions
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Possible services built on Open APIs (Savings and Investments)
• Wealth Dashboard – virtual platform
• Tax Optimisation
• Portfolio risk review
• Support for Life events (planned and unplanned)
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What a Dashboard Could look like
John SmithOverview
John SmithSavings and Investments
John SmithDebt
Cash ISA
GIA Pension
Mortgage Fixed Loans
Variable loan
Net Position£134,000
Total £297,000 Total £163,000
Fidelity ISA Multi Asset
£24,000
Fixed rate Mortgage
£150,000
Cash
£18,000
Cirilium Multi Asset Fund
£5,000
Vantage Growth SIPP
£250,000
Fixed Loan
£10,000
Partnership Card
£3,000
Consumer obstacles and how to mitigate
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Obstacles
• Consumers cautious about sharing data unless services are credible and trustworthy
• Consumer apathy and lack of awareness of the value of services delivered using Open Finance
• Regulation is still designed for old world and not data rich, so relying on technology driven solutions.
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EY Open Banking Opportunity Index
Source: EY Open Banking Opportunity Index, 2018
Trust Models TRUST CONCEPT QUESTION KEY FACTORS TO HELP BUILD TRUST
Security Is there protection to ensure the security of any information being shared?
• Standards• Oversight and enforcement
Integrity Is there a set of values or behaviours, will all parties stick to them, and do the right thing even if costs them
• Legal contracts• Dispute resolution services• Codes of Conduct• Trustmarks and registers
Credibility Does the other party have the necessary ability, competence, technical knowledge?
• Licensing, certification and accreditation• Trustmarks• Oversight and enforcement
Clarity Is what is being provided and what is expected clear and transparent?
• Education and awareness raising• Trustmarks and registers
Reliability Is it consistent? Will it do what they say it will do?
• Standards• Legal contracts and SLAs agreed between participating
firms• Licensing, certification and accreditation
Privacy Is there a suitable level of protection to ensure that data privacy rights will not be compromised?
• Legal• Codes of conduct• Oversight and enforcement
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Trust Marks
The shield is a common theme and conveys security and trust
The finger print is a modern and recognizable way to convey accessing your digital identity
A single trustmark across sectors and products is probablydesirable
Users do need some way to understand where they can use gather and aggregate their personal data using the Open Finance scheme: trustmark may convey this.
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Digital Identity
Federated Identity
Finance sector
Health
Government
Travel
Entertainment
Education A variety of access points and proliferation of Open Finance services requiring ID authentication to synthesise the services and experience.
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Adoption
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Rising Speed of Technological Adoption
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Day 1 - Scope Management• For day 1 we have defined a scope that is a Minimum Viable Proposition but also
establishes and tests the legal and governance model
Day 1Delivery
Valuations(basic, withdrawal, …)
Transaction Info(Income, dividends, equalisation, buys , sells , switches, transfers,…)
Transactional Instructions(Buy, Sell, Switch, move, …)
Funds, ETFsITs, Equities, ISA, GIA
Insurance plans, Investment Bonds, Pensions
Cash Deposits
Structured products, Loans
API Complexity
Assets /Wrappers covered
The way ahead
www.tisa.uk.com 68
Vision for the future
Develop a range of Digital tools and services to help consumers understand their financial situation and make better better financial decisions.
Shape public policy to ensure Open Finance creates positive disruption and the appropriate flows of capital allocation in markets that optimise financial outcomes for the consumer.
Promote this through direct to consumer communications such as value propositions, weaved into education, guidance and advice to provide better financial wellbeing for all.
www.tisa.uk.com 69
THANK YOU
www.tisa.uk.com
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Adam Byford, Distribution Director, Anorak Technologies
The new standard in protection sales
A software platform enabling any financial services company
to offer life insurance advice and products to their customers -
at scale
HELLO, WE ARE ANORAK
anorakBritish, informal: A person who is extremely
enthusiastic about and interested in
something that other people find boring.
Like life insurance.
HELLO, WE ARE ANORAK
An award-winning protectiontech company backed by AXA
Top 5 hottest fintech company in the world
Business Insider 2019
Most Innovative Life Insurance Firm
Life Insurance International Innovation Awards 2018
# 1 UK Insurtech
By Insurance Post and Tallt Ventures
£9M invested
As seen in: Cover Magazine – FT Adviser – Life Insurance International – Techworld – TechCrunch
Why do we exist
⅓ of families have no savings14 homes repossessed every day235 Landlord possession orders issued per day9m have no Life Insurance50% of mortgages aren’t protected97% of Self Employed have no income protection
WHY WE ARE HERE5
As an industry we are not providing the protection that people need
OUR FOCUS IS ON THE CUSTOMER6
We feel that the industry has lost sight of the customer wants and
needs
THERE IS TOO MUCH FOCUS ON PRODUCTS7
How many times do you hear people saying that they wish there
were more features on a product or that the definition of Devic’s
Disease is amended?
The way people expect to buy protection has changed – for good
CUSTOMER BEHAVIOUR HAS CHANGED FASTER THAN THE MARKET HAS8
Omnichannel access Instant solutions Expert help Data transparency
An online-first service, easy to
access on mobile, desktop,
chat or phone
A personalised experience,
plus an instant and situation-
specific outcome
Both automated expertise and
human help to support
informed decision-making
Fair value exchange, plus
transparent and minimal use
of personal user data
UNINTENDED CONSEQUENCES19
THE REASON WHY PEOPLE NEED PROTECTION HASN’T CHANGED10
New home New baby Death or illness
New job Marriage Divorce
What are we doing about it?
THE FUTURE OF PROTECTION
End customersGet needs-based advice and the right protection for them
Advisers Drive more sales and efficiency, with compliance and due care
This is not about Robo Vs Human It’s about building a scalable new
business channel that delivers better customer outcomes
12
100% proprietary technology stack
Data from partner integration
MACHINE LEARNING
DELIVERYOUTPUTCOMPUTATION (ANORAK ENGINE) INPUT
APIs
Customer platform
User profiling
Insurance
modelling
Risk analysis
User input
Open data
Quote APIs
Behavioral data
platform & APIs
Financialplanning
Protection recommendations
Personalised
Compliant
Instant
Adviser platform
13
OUR TECHNOLOGY14
Anorak advice engine
Customer platform Adviser platform APIs
● Lifetime risk exposure and needs analysis
● Coverage gap analysis
● Multi-scenario computation
● Optimal coverage computation
● Market-available product outcomes
● ML-trained predictive quoting
● Deep semantic data modelling
● Dynamic product suitability analysis
● Reverse engineering of whole-of-market
protection products
● ML-trained predictive quoting
Insurance modelling
● Multiple data sources – e.g. bank
transactions, risk data and open data
● Open-banking used to profile and monitor
users
● Actuarial and risk data integration – e.g.
mortality, morbidity and incidence rates
● CRM system integration for automated
protection fact-find
AI-based user profiling Financial planning & risk analysis
Who do we work with?
PROTECTION DISTRIBUTION
With technology, it’s anyone’s game
Create the opportunity
● Employee Benefit Consultants
● Online money services
● Affinity brands
● Anyone good at helping people online
Seize the opportunity
● Insurers
● Banks and Lenders
● Price comparison websites
● Mortgage advisers
● Financial advisers
16
EARLY ADOPTER PARTNERSHIPS
● Mortgage data creates report
● Anorak email client
● Client view
● Call trigger from client action
● L&C use adviser view
● Adviser support provided on
telephone (L&C)
● Anorak provide Nutmeg with content
for emails and blogs
● Nutmeg have incorporated a Life
Insurance section into their financial
report
● Clients are passed to Anorak without
data
● Adviser support provided on
telephone (Albany Park)
● Digital marketplace
● Exchange of bank data
● 2-way trust model
● Opportunity to review on ongoing
basis
● Adviser support provided on
telephone (Albany Park)
17
Reinventing Bancassurance 3.0 for life insurance● In App Marketplace - personal and sole trader
● 2 Way data trust model established
● 1 time sign on process
● Customer profile created based on bank data and customer input
18 Bancassurance 3.0
19 IP PROMOTED THROUGH THE NEW SME MARKETPLACE
20 STARLING CUSTOMER ARRIVES AT THE SAME LANDING PAGE BUT WITH SOME QUESTIONS ANSWERED BY THE BANK DATA
21 BANK DATA POPULATED JOURNEY
Bank Data Mortgage Data
Name 👍 👍
DOB 👍 👍
Sex 👎 👎
Partner Name 👍 👍
Partner DOB 👍 👍
Partner Sex 👎 👎
How many children 👎 👍
Age of children 👎 👍
Childcare Costs 👍 👍
School Fees 👍 👍
University Fees 👍 👍
Bank Data Mortgage Data
Smoker Status 👎 👎
Employment Status 👎 👍
Occupation 👎 👍
Benefits from Employer 👎 👍
Other Personal Cover 👎 👍
Savings 👎 👎
Expenses 👍 👍
Property Ownership 👎 👍
Mortgage Amount 👍 👍
Rent Amount 👍 👍
22 Expenses Analysis
● Bills and Subscriptions
● Communications
● Energy
Electricity
Gas
Household
● Groceries
Alcohol, tobacco & Narcotics
Food and non-alcoholic drinks
● Insurance
● Other
Essential
Non-Essential
● Recreation and Culture
● Holiday
● Other holiday expenses
Other recreational activities
● Eating and drinking out
● Clothing
● Transport
Any questions?
July 2019
THANK YOU
Adam Byford
Distribution Director
+44 7539 167874
www.tisa.uk.com 94
John Salmon, Partner, Hogan Lovells
John Salmon
The legal issues
Open Finance
| 96Hogan Lovells
• Compulsion vs non-compulsion
– Pros & cons
– Key legal issues
• Comparison between mandatory and voluntary contractual framework by reference to examples
• Secure access and communication
• Privacy
• Liability
• Authorisation and due diligence
Overview
Hogan Lovells
• Compulsion
– Mandatory framework
– Using mandatory open banking regimes in the UK and EU, namely Open Banking and PSD2, as a reference point
• Non-compulsion
– Contractual framework
– Such as the Open Savings & Investments (OS&I)
• What can we learn from:
– Open Banking
– Voluntary frameworks like TeX
Compulsion vs non-compulsion
Hogan Lovells
Pros & cons
Compulsion Non-compulsion
Pros • Clear uniform framework• Regulatory compulsion and
consequences
• Industry has control• Much more flexible to change
Cons • May not be so clear• Difficult to alter
• May not have uniformimplementation
• Voluntary nature
Hogan Lovells
Different approaches to Open Banking
Ismail Chaib (November 2018), 'Regulating Open Banking - How regulators around the world are shaping the future of financial services', Open Bank Project.
Hogan Lovells
Key legal issues
Compulsion Non-compulsion
• Coherent standard framework• Ensuring technology neutrality vs
certainty• Privacy issues can be subsumed• Liability model can be provided• Authorisation/regulatory models for
access – mandatory access?• Withdrawal of access set out clearly • Dispute resolution and customer redress
mechanism
• Possibly different contractual models• Standard technology approaches that
can be adapted as necessary• Privacy concerns• Difficulties of agreeing liability model• Difficulties of managing access issues for
third parties – authorisation?• Difficulties of management withdrawal
of access• Agreed dispute resolution process
PSD2/Open Banking Model
Compulsion
Hogan Lovells
Where does responsibility
begin and end?
Intellectual Property
Governance Issues
Regulation
PSD2 vs Open Banking
Open BankingCMA
• 9 mandated banks• PCA/BCA accounts only• Open API interface• Implementation Entity
with an Independent Trustee
CMA & PSD2• GBP payments• Payment Initiation
services• Transaction History
services• Explicit consent
PSD2• All payment service providers
(PSPs)• Non-prescriptive dedicated
interface• Multi-currency• Strong Customer
Authentication• All payment accounts
Open Banking PSD2 Scope
PSD2 Scope
Hogan Lovells
Compulsion – PSD2/Open Banking Model
PISP AISP
Payment initiation service
Account information service
ASPSP (Bank)
PSU(Customer)
Hogan Lovells
Consent and privacy (1/2)
PISP AISP
ASPSP (Bank)
PSU(Customer)
Grounds for processing
Grounds for processing
Grounds for processing
Grounds for processing
Explicit consent
Fair collection notice
Fair collection notice
Hogan Lovells
• Key Issues
– Explicit consent under PSD2 is “contractual consent”
– Under GDPR means any freely given, specific, informed, unambiguous – clear affirmative action
– Grounds for processing
– necessary for the performance of a contact
– Legitimate interests – silent party data
Consent and privacy (2/2)
Hogan Lovells
Secure communications (1/2)
PISP AISP
ASPSP (Bank)
PSU(Customer)
Strong customer authentication
Identification of PISP and AISPSecure
communications Secure
communications
Hogan Lovells
• Key Issues
– Use of EiDAS Certificates
– Secure communications between the parties
– Strong customer authentication – demands 2 factor
Secure communications (2/2)
Hogan Lovells
Liability (1/2)
PISP AISP
ASPSP (Bank)
PSU(Customer)
Refund to customer for unauthorised
transactions
Liability for unauthorised transactions
Liability for fraudand gross negligence
Liability for unauthorised transactions
Hogan Lovells
• Key Issues
– Liability model is limited
– Unauthorised transactions only
– Difficult to see relevance to AISP model
– Interaction with GDPR
Liability (2/2)
Hogan Lovells
Authorisation, due diligence and access (1/2)
PISP AISP
ASPSP (Bank)
PSU(Customer)
Must allow access to payment accountsMust be
authorisedMust be registered
Hogan Lovells
• Key Issues
– Mandatory access for regulated TPPs
– No due diligence permitted
– No contracts permitted
– Cannot refuse access unless justified reasons
Authorisation, due diligence and access (2/2)
Contractual Model
Non-compulsion
Hogan Lovells
Savings and Investment – Current Situation
Data provider Data consumer
Customer
Financial service product providers
hold the data
Individual unique contract for every
relationship
App provider/firm requests the data
Hogan Lovells
New contractual framework (Open Savings & Investment)
Data provider Data consumer
Customer
OS&I
Data sharing agreement
Sign up to OS&I Sign up to OS&I
Standard documentation provided by OS&I issued by Data Consumer to Customer
Hogan Lovells
Consent and privacy
Data provider Data consumer
Customer
OS&I
Grounds for processing
Grounds for processing
Fair collection notice
Hogan Lovells
Secure communications
Data provider Data consumer
Customer
OS&I
Customer authentication
Secure communications
Hogan Lovells
Liability
Agreed liability model
Data provider Data consumer
Customer
OS&I
Hogan Lovells
Authorisation and due diligence
Regulatory status of data consumer
Data provider Data consumer
Customer
OS&I
Hogan Lovells
• Key legal issues to be resolved
– Privacy
– Secure access
– Liability model
• Key advantages of industry led approach
Conclusions
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