Why the financial services sector needs a shake-up

It’s easy to see why some consider the financial services sector slow to evolve.

The industry faces strict regulatory requirements that — rightly so — place the security of clients and their funds above all else. It’s also risk-averse by nature. Companies seek to grow their clients’ businesses and wealth in a measured and responsible way. Meanwhile, when it comes to refining and modernising internal processes and organising masses of client data, many believe the juice isn’t worth the squeeze.

Yet despite these limitations, change is necessary. After all, in modern business, standing still usually means falling behind. I believe that the financial services sector needs a shake-up — a belief that guided our launch of Reckon Financial Services during September 2024.

Having gained our trust company business license, Reckon arrived with the aim of being a trusted partner for financial preparedness, taking care of the complexities of modern financial services. We’ve set out to take a fresh approach, providing tailored and transparent support across a diverse set of services.

But what’s prompted our new approach? What facets of the industry do we believe need are think, and what benefits can this bring to clients? Read on to find out.

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Digitisation can go further

The last decade has seen the financial needs of clients shift to favour more heavily digitised services. Yet despite this, I don’t believe the industry has gone far enough in adopting disruptive tools such as cloud accounting, artificial intelligence(AI), and machine learning (ML). That’s especially surprising when we consider the success of challenger brands like Revolut and Monzo that have quickly grabbed market share with a digital-first approach.

With the advancements seen in AI and ML, clients now expect a more sophisticated yet simplistic tech-led offering from financial service providers. Cloud accounting allows accountants to work from anywhere, collaborate in real time, and provide continuous updates on a client’s financial status. Problems are solved faster, clients gain greater visibility to the process, and accountants are more efficient overall.

What’s more, AI and ML are revolutionising the automation of routine tasks such as data entry, invoice processing, and auditing. Algorithms are being used to process large data sets, identify trends, flag anomalies, and make predictions, improving decision-making and fraud detection. These technologies help to reduce manual errors and enhance fraud detection while improving financial forecasting and auditing efficiency.

The want and need for greater digitisation goes further still to include a clients’ day-to-day experience. Prospective clients often voice frustrations to us about the inefficient processes provided by larger firms, which includes lengthy onboarding and verification due to a need for wet signatures, additional certification, and physical documents sent by post. These slow and more labour-intensive processes now seem archaic to clients, which is why Reckon has built our service to be faster, smarter, and more effective thanks to the advanced technology powering our services.

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Too complex, too opaque

Just as clients feel frustrated at outdated processes, they also come to us voicing concerns about the complexity and lack of transparency in the industry. In particular, complex fee structures often leave clients feeling unclear about the precise fees they’ll encounter and fear the additional fees commonplace from private banks and investment firms. That includes overdrafts and fees for account maintenance and out of scope transactions.

The fix? Looking ahead in the engagement with a client to price in future material events, such as additional services related to investments, audit, and assurance services or disposals. Of course, all of this must be discussed with the client up front, rather than baking it into agreements with no visibility.

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Personalisation is a priority

Personalisation is another must from many of today’s clients, as a one-size-fits-all offering is no longer adequate to the new client base. Technology can provide the answer here. Clients can now, for example, receive spending analysis, investment guidance, and savings recommendations that are informed by entirely personalised, data-driven insights. That means no more cut and paste strategies, but a customised service built around each client’s unique goals, circumstances, and historical context.

Meanwhile, many clients also now want to be more involved and engaged in the decisions made by their chosen financial services provider. With financial independence their goal, clients look to their provider to educate them in financial literacy, rather than simply organising their finances or business as a third-party. To deliver this, partners should look to provide educational resources, tools, and insights that help the client to make more informed financial decisions of their own.

One advantage brought by Reckon towards personalisation is the broad real-world commercial experience of our team. Because our people have years of experience structuring and leading the financial function within companies of all sizes, they understand first-hand the problems clients face day-to-day. That frontline insight is invaluable when customising services to best meet a client’s goals and advising them during difficult times.

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Change is inevitable — and essential

In business, change is inevitable — even if it seems impossible or unwanted. Consider for a moment wealth management services. With a healthy legacy book of Baby Boomer and Gen-X clients who are used to a certain way of doing things, many firms simply don’t need to alter the way they do things. It’s only when the wealth begins to transfer to Millennial and Gen-Z individuals that questions are raised. These younger members typically expect a different approach — digitised, personalised, simplified, and collaborative — and will actively look elsewhere if their provider can’t deliver. That’s why change is needed.

It’s said that the species most able to adapt is the one that survives. That could be true in finance as in nature.

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Interested in learning more about Reckon’s broad and tailored approach to financial services? Let’s start the conversation today: Alfie Greenway