Kidbrooke has already helped several of Sweden’s largest banks and insurers to automate some of their wealth management services, but this WealthTech startup is just getting started.
Kidbrooke is planning to radically disrupt the wealth management industry with technology, in similar ways to how the global travel industry has been transformed by technology over the past few decades. “It was always super expensive to travel when I was a kid,” remembers Fredrik Davéus, the CEO and co-founder of this WealthTech provider. Back then the travel industry was littered with physical agencies where advisors would help eager world explorers find the best journeys within their budget. The whole process was expensive, slow and didn’t really encourage competition. Then came the internet. Suddenly, physical branches closed as customers migrated online to do their bookings faster and at a lower cost, forcing the industry to follow. “Today it’s probably almost 99% self-service,” Davéus continues. “And you can see the inclusion aspect. Everybody travels today because it is affordable.”
With its innovative API-based technology offering, Kidbrooke was set up to help the financial industry provide a similar democratisation for their clients. That’s no small deal. Wealth management used to be an exclusive service, only accessible for individuals with particularly deep pockets. Usually, only high-net worth individuals could use it because the costs of providing financial advice and sophisticated asset management services were just too big.
But, thanks to the digitalisation of the economy, innovative companies like Kidbrooke can now help transform the industry to become more inclusive. They do that by providing technology enabling the automation of financial decision-support, allowing for a more efficient use of advisors’ time. The technology also enables more engaging hybrid and self-service customer journeys and other innovative features such as proactive notifications. By doing so, wealth managers can slash the cost of providing consumers with high quality financial guidance that caters to their fundamental needs. Overall, it is more likely to result in the customer feeling in control of their financial situation. In the process, wealth managers can provide new and improved services to a whole new segment of the market. “The main thing here is that you could free up time for the human aspect, to be more like a personal coach and, you know, manage the emotional side of these transactions, and at the same time empower each advisor to service many more clients which brings down the unit cost of providing advice” Davéus says.
However, big changes have started to happen. “Over the last couple of years Kidbrooke has transformed itself from a pure consulting outfit into a tech company,” Davéus says. The transition came naturally and in response to customer demand. While Kidbrooke had helped its clients create bespoke solutions, several of them had realised that building these systems was complicated as well as costly. As a result, Kidbrooke’s leadership realised there was an opportunity to create a solution that could be sold and tailored to fit the needs of different clients. Bespoke WealthTech solutions, but with a shared core.
Today, the company has three main components to its platform: an economic scenario generator, a transaction-based simulation engine and a decision support generator. The expertise Kidbrooke can deliver is clearly exemplified by the services it has provided to some of Sweden’s largest banks and insurance companies over the past four years. Some of the transformations initially started as pure consulting projects.
One incumbent financial institution had provided with-profits and unit-linked pension products and retirement planning services for many decades. However, the introduction of MiFID II and other regulations slammed them with more regulatory obligations to fulfil. They needed to find a way to reduce compliance pressure and to provide a more holistic financial advice service. The answer to this conundrum was to enlist Kidbrooke to help it digitalise some of its services. This meant that they had to conduct in- depth demographic analyses to understand how the consumer groups would adapt the new service.
Secondly, the incumbent needed to convince management that the costs of introducing the new solution would be worthwhile. Since the last credit crunch, many banks and insurers had accrued a lot of money and didn’t feel pressured to improve efficiency in new ways and cut costs. “This is the industry’s mindset in general,” Davéus says.
However, the benefits of using Kidbrooke’s technology to automate the generation of financial decision-support and advisor proposals were too significant to ignore. Kidbrooke could show that it had enabled other customers to introduce consistent, high-quality financial coaching or advice solutions which foster trust across all channels.
Moreover, Kidbrooke’s OutRank technology drives customer engagement by providing relevant, personalised and proactive notifications which are a great tool to increase the potential number of customer touchpoints.
Kidbrooke’s involvement resulted in a range of efficiency improvements within the customers’ wealth management businesses, ranging from a surge in customer touchpoints to general cost savings of between 20 and 40% within the processes powering the typical customer journeys.
For Kidbrooke, the experience of driving its customers’ transformations have provided vital insights for the future. “Some of these experiences definitely made it very clear to us just how big the sheer amount of orchestration required to drive change in these organisations is,” he says. These insights become even more important as Kidbrooke looks to expand its offering abroad, starting with the UK where it already has two solutions representatives who are actively promoting Kidbrooke’s message. “We’ve definitely ramped up our presence in the UK since last fall,” Davéus says.
But it’s not like Kidbrooke is leaving Sweden anytime soon. The Swedish system has over the past few years been shackled with a series of scandals, including several involving the state-run retirement schemes. However, Davéus believes these affairs, coupled with the unprecedented surge in use of digital services during the COVID-19 outbreak, have highlighted the need for insurers and financial firms to be on top of these issues and to meet the demands for services they can obtain through Kidbrooke. “That’s really what is driving us now, trying to get this tech out to as many end users as possible,” Davéus concludes.
Kidbrooke was recently named in the WealthTech100 2020 list, to check out the full WealthTech100 click here: WealthTech100.
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