We’ve gathered the most exciting highlights from the digital advice innovation landscape as well as the latest news related to balance sheet risk.

Automated Financial Advice

Fidelity International, a DIY investment service, intends to launch a digital financial advice service. The company, which has been running a traditional financial advice offering for a number of years, tested the service in Germany in October, now planning to expand the market to the UK. This indicates an increased pressure to obtain a market share in robo-advice products, as banks come up with low-cost investment advice solutions backed by already developed customer platforms.  Link. 

According to the report by the Intermediary Mortgage Lenders Association (IMLA) that explored the digitalisation of the UK’s mortgage market, the fully-automated customer journey in this area is still “a long way off”. The challenges outlined in the report concern the soft skills of the brokers that are hard to replicate by automated solutions and the difficultly to “fit customer’s life” into the decision trees of giving out a loan, which result in a high number of applications declined by the machines, which are later approved by the physical mortgage brokers. Link. 

The latest large bank in the UK to offer an automated investment advice, HSBC, is targeting 2.87 million customers with investable assets of at least £1,000. The new service, marketed under name “My Investment”, will be available at an initial charge of 0,5%, followed up by fees up to 0,46%. Link. 

An American robo-adviser, Wealthfront, is offering its financial planning services free of charge. The second-largest independent robo-adviser hopes that using free financial roadmaps provided by the service would steer the freemium clients to upgrade to fee-based accounts. Link. 

The ResearchAndMarkets.com has published a research evaluating the prospects of the UK's robo-advisors. According to the report, the UK market of digital financial advice would continue its growth with double-digit speed throughout the forecasted period (until 2023). The market is anticipated to be segmented into fully automated robo-advisors and hybrid offerings, while the main market growth would be attributed to the mass affluent that could take a share of HNWI market. Link. 

Balance Sheet Risk

The European Union regulators can potentially postpone the introduction of capital charges in accordance to FRTB framework beyond the currently set deadline of 2022. According to the Risk.net source, the supranational regulator plans to initially introduce only the reporting requirements and thereafter focus on achieving an appropriate process to ensure consistency and alignment with the Basel Committee on Banking Supervision standards. Link. 

HSBC has welcomed Keith Garbutt as its global head of independent model validation. He previously spent 14 years at Credit Suisse, where he his latest position was a head of enterprise risk innovation. Keith Garbutt joined HSBC in October and now reports to Clare Beale, global head of model risk management. Link. 

The  Basel Committee on Banking Supervision published a report identifying, describing and comparing the range of observed bank, regulatory and supervisory cyber-resilience practices across jurisdictions. The report summarises ten key findings on the challenges and initiatives to enhance cyber-resilience. Additionally, it describes a number of case studies illustrating concrete developments in the economies covered. Link. 

In an Accounting Today Podcast, Vinay Pai, senior vice president of engineering at Bill.com, describes the AI methods used in contemporary financial industry and elaborates on how they would affect the accounting profession. More specifically, he talks about the document recognition and automatic pre-population and identifies two goals in using AI within accounting: teaching the AI to perform routine accounting processes and eliminating payment data population by humans. Link. 

Nordea has recently announced the launch of Instant Reporting, its new Open Banking product for corporate clients. The solution supports the linkage between third-parties and Nordea and goes beyond the PSD2 compliance, being a commercially viable Open Banking offering allowing the customers to access accounts and integrate real-time data with their platforms and processes. Link.