Financial Technology: Learning from the Past to Look into the Future

Written by Christopher Olson

Throughout history, technical innovations have simplified tasks that were once inefficient and time-consuming. The breadth and diversity of such innovation is a testament to human imagination and creativity. Who hasn’t marveled at the thought of self-driving cars, a house that responds to your voice and robots that can fetch things for you? Oh wait, these are all things we can do today! Maybe we aren’t beaming people to other planets or hovering around in jetpacks (yet), but many technologies that were once considered science fiction are now a reality. Some have even become essential to our everyday lives. For example, technical innovation has automated our home systems, simplified bill payment and innovated how we travel – providing new options and ease of use that were never thought possible.  

Financial systems have also experienced significant technology innovation over the last several decades. We often take for granted the most impactful technologies because they have become so ingrained in our current reality, we forget what it was like before. There was a time before electronic quotation systems when stock quotes were printed on ticker tape. There was a time before ATMs when the only way to deposit or withdraw cash was with the assistance of a bank teller. There was a time before online trading when stocks were purchased and sold only through a stockbroker.  Fintech solutions changed all that. And they triggered industry evolution that was challenging for financial firms that were slow to respond. 

This effect is as true today as it was back then. In today’s time of even more rapid change and innovation, companies that don’t adapt are stuck and unable to properly scale their growth or even worse, made obsolete. Investment firms are encountering this very challenge right now in the area of structured products. Today, most firms still rely on emails and spreadsheets to customize structured products or run manual performance inquiries for post-sales performance tracking. These processes are inefficient and prone to error due to their heavy reliance on data-entry and physical paper trails. Additionally, they slow down trade desks and create bottlenecks for advisors looking to provide high-quality service to their clients.  

Online platforms specializing in the transacting of market-linked investments automate all of this. They also create stronger safeguards for compliance through a customizable order-entry system. They free up time for product managers to concentrate on financial innovation and allow advisors to more effectively manage alternative investments for their clients. Here are some of the specific innovations and benefits that these online platforms deliver. 

Streamlined Workflow Integration and Order-Entry System 

Online platforms have a built-in order-entry system that optimizes both control and compliance by providing banks and broker-dealers with customized product parameters, functionality to issue approved product lists to all advisors, manage and review trades, and access a historical archive containing all rep activity. Additionally, investment firms can now create and customize their own structured product to provide investment solutions based on need without having the limitations of a monthly catalog list. 

Post-Sales Support Functionality 

Pulling up post-sales performance reports typically involves an advisor contacting a wholesaler, issuer, or their trade desk to obtain a product performance data. This process usually takes at least 15 minutes or even longer, depending on response times. With online platforms, pulling up the reports is automated, taking only a few seconds. Moreover, a notification system alerts advisors to potential call dates, maturity dates, and coupon payments, along with reinvestment options for their clients.  

Marketing and Educational Resources 

Alternative investments, specifically structured products, can be difficult to introduce to clients. Even the simplest product, a market-linked CD, can seem overwhelming to clients at first glance. Having a library of client-approved marketing material and advisor training empowers advisors by providing the proper training and resources to introduce and explain structured products to clients. 

Today, it’s simple and convenient to check your 401(k) balance, pay back a friend for lunch or place a stock trade – all from your mobile phone. Now, the path to get to this convenience was not easy. Nevertheless, firms that don’t embark on this change run the risk of falling behind the competition. While sticking to what’s familiar is comfortable, the simple fact is that online platforms are no longer the future of structured products, they are the present.