In the final instalment of my summary of Finovate Spring in San Francisco I am going to include two of the most exciting demonstrations from the whole event.
Tip Ranks applies technology to the process of rating analysis reports in the way that certain other services have been rating fund managers for many years but being technology driven can include data from a far wider range of sources.
The service, which is currently in a closed beta environment, constantly scans 50 financial websites and a wide range of other data to in order to measure how accurately investment analysts perform. It is currently only measuring reports of US equities although the market opportunity represented by mutual funds is recognised.
In the example provided for the show, the company highlighted an analyst who had recently given a sell recommendation on Microsoft. In the subsequent period Microsoft stock actually rose significantly. Of the 21 recommendations given by the analyst in question only nine had out-performed the market and overall the recommendations given by the analyst actually lost on average 1.9 per cent of their value. Tip Ranks scored this analyst 1,674th out of the 1,940 analysts they were rating on the system.
The system also allows users to look at all the analysts making recommendations on a particular equity and their overall performance. Although the service is currently in closed beta Tip Ranks has provided me with a limited use login which will be usable for approximately one week and will shortly be posted to my AdviserSoftware.com LinkedIn group.
Anyone wanting to access this who is not a member of this group can apply here. I suspect anyone who is regularly reviewing the performance of individual equities will find the Tip Ranks video here fascinating.
Helping consumers understand how their personal finances compare to their peer group is increasingly recognised as a great way to help consumers see their affairs in context.
Persint delivers a consumer analytics capability to enable users to do exactly this. In so doing it enables them to answer the key household questions of “where do I stand” (financially) and “what next” (solutions).
In just five clicks the user can be mapped to one of 120 peer groups for comparison. Such an approach provides the investment industry with a far more meaningful way of illustrating the value of savings, relative to an individual’s peers, rather than producing pages full of numbers with many zeros which are at best a guess of the future outcome and subject to a massive number of variables.
In turn this data also produces a financial health score measuring net worth, cash flow and risk management. These are clearly articulated using numerical scores and colour codes with each being compared with peers and showing the percentile achieved. Total expenses are also measured and categories broken down into eight areas in line with typical account aggregation practice.
Persint produces an individual’s financial health score and can identify areas where expenditure is above the peer group average to identify where savings can be made
By identifying areas where expenditure is above that for peer groups the system can ascertain where savings might be achieved and even link to comparison services showing alternative suppliers.
The context provided should help consumers recognise where action is most suitable and help organisations supplying the service to optimise the opportunities to provide more competitive solutions for a whole range of financial and other related needs.
Persint sees itself as a business to business service designed to help financial institutions make personal financial management more effective and is expecting to go live in the fourth quarter of 2013.
The last business I want to focus on in this summary of world class financial innovators is a great example of why I passionately believe digital financial services can bring huge benefits to society as a whole.
Lend Up represents a viable alternative to perhaps the most socially damaging new type of financial services businesses to have emerged in the last decade, the pay day lenders.
It has created an instant loan system designed to support those customers usually declined by traditional banks and give them a way to rehabilitate their credit record so they can access credit in future at mainstream prices.
The service, which can operate over a mobile phone, allows instant loan decisions with the money being immediately deposited in the customer’s bank account.
Rather than use the technology to create a digital version of the pay day lender, it also supplies tools to help its customers better understand how to manage and control their debt.
By using what it has called the Lend Up Ladder the company has gamified its process enabling users to earn points for prompt or early payment and to earn more points for taking their lending education programme.
As customers earn points they get access to more money at lower rates and having established positive lending history can have this shared with the major credit agencies.
Lend Up brings together the best of technology with a genuine desire to improve people’s lives in a way that is typical of the emerging digital financial services industry which, in my experience, consistently targets a far wider section of the public making advice and other financial services available to them at far lower cost than the traditional industry.
I believe there is a very important lesson for the UK which is entirely appropriate to the post-RDR world.
Over the last few years, countless surveys have identified that the price consumers are prepared to pay for financial advice is far less than advisers have traditionally charged.
Digital financial services solutions are increasingly emerging elsewhere in the world which can deliver services which provide huge consumer value for charges in line with what consumer research has indicated people are prepared to pay. If this can be achieved elsewhere why can it not be done in this country?
To me the challenge is how can we learn from activity around the world so that such services can emerge in the UK as they are internationally.
Finovate Fall in New York on September 10th and 11th is the next event in this series and I will be attending to create a similar summary of all the latest in leading edge innovation that can help deliver better experiences for consumers.
Ian McKenna is director of the Finance & Technology Research Centre