Data and Account Aggregation is a Winner-Takes-All Game

Tanmai Sharma is the CEO and Founder of Canopy, a financial data company that aggregates data for client accounts into insightful investment analytics. He presented his insights into customer behaviour, telling attendees he has no doubt that deep data aggregation and analysis is the way forward in wealth management.

“Data aggregation is a winner-takes-all game,” Sharma began his presentation at the Hubbis Digital Wealth Asia Forum. “Canopy offers proven, highly efficient, smart, data-driven products to wealth managers to enhance their capability in dealing with investors. We know that customers have very set digital habits, that these habits can be exploited to create ‘stickiness’ and influence buying behaviour, and most importantly we know that banks offering data aggregation for the customer have an winning edge.”

He explained that Canopy can provide a holistic picture of customer’s assets for private banking relationship managers (RMs) to help build their trusted relationships with clients, thereby adding value for both the customer and the RM. This is achieved using data analysis and visualisation in areas such as peer comparison, profit analysis, volatility, value and Sharpe ratios.

“We have clear evidence from our experience at Canopy that these tools help wealth managers increase revenue by increasing traction with the customer and improving the efficiency of RMs,” Sharma reported.

Mine and deliver

Sharma elucidated that it is essential to mine down and make use of all the digital information being created on a daily basis. “In reality,” he elucidated, “the customer has been sitting there alone with a spreadsheet, aggregating their own data, which is far from the best solution. That data remains trapped within the individual’s private files. It cannot be used to improve services, win customers or increase revenue.”

It is important for wealth managers to realise that customers usually cultivate relationships with five or six other banks, and as such only a small slice of the data pie is visible to any one bank or RM. “Not only this,” Sharma confided, “but they are also conferring privately with their peers about the relative service they receive from each bank, what kinds of deals they are being offered. It is a highly competitive world.”

The thrill of the chase

Canopy has been in business for five years and is currently serving around 65 custodians by processing upwards of USD20billion in assets. “My philosophy is that if Canopy is not making money for you, we are wasting our time,” Sharma stated. “We imagine the process of procuring customers as a hunt, knowing that they will behave in predictable ways. To win that customer, you need to know or predict how they will behave.”

Indeed, customers tend to be creatures of habit. “They experience a constant stream of updates, information and technological advances being sent to them, but typically choose to continue in the same way as they always have,” Sharma explained.

“So,” Sharma expounded, “we see these consistent customer characteristics, and from this we can build up a profile of customer behaviour that can then be used to enhance customer engagement.”

Comparing and contrasting

One customer trait that Canopy uses to their clients’ advantage is that they are typically very interested in peer comparisons. “There is a reason why reality shows are so popular,” Sharma quipped, “as there is no script, it cannot be predicted, and there is an element of competition. We have found that customers are really keen to compare their investment performance with that of their peers.”

In addition to this, Sharma explained that when presenting data to the customer, there are three main considerations. “Customers want all their data in one place,” he elucidated. “If you have 50% of the data in one place and you make the world’s best visualisation possible, you are simply wasting your time. Secondly, there is no one-size-fits-all visualisation solution, for example we are often asked for simple net-worth tables as well as far more in-depth analyses. Thirdly, customers change their data visualisation requirements often.”

Websites and apps are old hat

Sharma then confided to the audience that in Canopy’s view websites and apps are passé. “Twenty years ago,” he observed, “if you made a new website, people would flock to see what it offered, but now the market is so over-saturated with websites that nobody cares anymore. In fact, non-transactional bank website logins are close to zero – almost nobody logs in to check their asset allocation or their plan for retirement.”

Sharma therefore suggested that spending time on a state-of-the-art digital interface for a bank is a waste of time, as customers still usually communicate by email.

Email still the core medium, but with caveats

“At this point in time, you can make a ‘Ferrari’ of a website, but it will make no difference to the earning potential of your business,” he clarified. “Customers open emails, but they do not open attachments or click on links. The key content must therefore be instantly visible in the body of the email. Going back to the hunting analogy, email is your watering hole, and to hunt the customers you must still show up at that watering hole.”

In conclusion, Sharma advised that sending a customised email from Canopy to customers every week, packed with insightful, customised visual analytics, keeps customers interested enough to keep them coming back to the email and increasing contact with their RMs. “Ultimately, we have found that customers who use Canopy and engage with their RMs experience a 60 to 70 basis point improvement in their portfolio performance.”  And for HNWIs and ultra-HNWIs with huge investments, that can add up to substantial sums.