Following a few months after Santander announced a similar online platform, it is fair to say the banks are slowly finding their way back into the retail investment space. The question for the broader financial services sector is, as Mark Polson, CEO of the Lang Cat put it: “What happens if they get it right this time?”
It is unlikely that either of these offerings has the likes of Hargreaves Lansdown and Charles Stanley quaking in their boots, but it will certainly make the sector more competitive from a new client acquisition perspective.
As Polson explained: “The advantage the banks have is that they have access to very large customer banks to whom they can market such a new service very effectively, which gets rid of some of the inhibiting factors that have affected smaller, start-up players.”
Discretionary wealth managers are even less likely to have taken the news as a direct threat to their business – which is as it should be, because these offerings are unlikely to compete head-to-head with a full-service wealth management business. What it does do, however, is up the ante from a technology perspective. And, this is where wealth managers and advisers should pay attention.
For James Alexander, director within the investment management team at KPMG UK, the shape of the banks’ re-entry is important.
“The banks have had some bad experiences in the past, particularly with face-to-face advice, so what they look to do in the future is inevitably going to be shaped by that,” he said.
While he believes it unlikely that there will be a return to the banc assurance model of old, he said: “They [the banks] recognise that the UK wealth management market is a very attractive one in which to be active because of changes like the recent pensions freedom announcements, the move to auto enrolment, and the shift from defined benefit to defined contribution schemes.”
