Occasionally, there’s a moment in financial services when the wind shifts and regulators, government and industry all start pulling in the same direction. The discussion around targeted support feels like one of those rare times.
It’s worth celebrating, just as we celebrated the push for competition in banking a decade ago.
Moments like this matter because alignment creates courage, which is something our industry needs in spades.
While retail brands happily shout “buy, buy, buy”, we whisper “invest, invest, invest” behind closed doors, terrified of crossing the line between guidance and advice.
I don’t believe that targeted support alone will close the advice gap, but it might unlock something just as important: experimentation
For an industry built on managing risk, it’s no surprise that fear of getting it wrong so often trumps the instinct to try something new.
I don’t believe that targeted support alone will close the advice gap, but it might unlock something just as important: experimentation. It could give firms permission to test, learn, and find new ways to reach people who currently get no help at all.
So if this really is a moment for bravery, how do we make the most of it?
Read the rules – don’t just copy others
When a new consultation lands, more people than you might expect read all 150 pages and think creatively about how to build great customer products that meet the new regulations. But this is unusual.
Very often our industry operates on precedent, not principle. We do what’s been done before instead of challenging ourselves by asking: “Where does the sourcebook actually say that?”
In the early days of challenger banking, the classic example was the deconstruction of the current account.
Many emerging brands offered pre-paid cards without a banking license before they offered a current account and found they could achieve similar levels of customer delight.
We were inspired by that way of thinking at Octopus Money.
We looked carefully at the existing rules around financial advice and realised we could help people plan their money and get financial advice using coaches and smart technology rather than the traditional model – all without breaking any rules. And, we could deliver it at a fifth of the cost.
I think there’s room for enormously more creativity within the lines than we choose to take advantage of.
Worry about the customers you don’t serve as much as the ones you do
Most risk frameworks focus on what could go wrong with existing clients: conduct, suitability, disclosure. All vital, of course. But what about the strategic risk of unmet needs, which hits the growth of our businesses?
Most people still don’t get financial advice or even basic money help. Almost 50% of young workers don’t think they’ll ever be able to afford to retire.
Those unmet needs lead to poorer financial decisions, greater anxiety, and an industry that grew only 4% last year, including markets.
Let’s pretend the same was true in a different industry. Imagine our health service only cared about treating people when they were already sick, instead of helping them stay healthy in the first place.
You don’t change the world by doing what’s been done before, so the most innovative teams are those that learn relentlessly
We’d get rid of vaccines, weight management advice, and statins for your blood pressure. We wouldn’t be conducting research into genes that increase our risk of cancer, we’d be treating the disease only when it reared its ugly head.
Both examples are societally and commercially illogical. But in financial services, the cure is regulated and very often the customer that requires prevention falls outside that remit for an individual firm.
This is not just bad for people, it’s bad for business too. That lost commercial opportunity could be every bit as damaging if our industry is stagnant.
So I challenge you to imagine a world in which the strategic risk of an unmet need features on your risk register alongside everything else; where your risk committee worries about all the people heading for bad pension outcomes, and works hard to reach them before it is too late.
Build a culture where it’s safe to stumble
You don’t change the world by doing what’s been done before, so the most innovative teams are those that learn relentlessly.
But this requires a third type of bravery: comfort in your own mistakes – particularly if you’re a leader, because when leaders admit their own missteps, they make space for others to try harder.
You might be thinking that this approach only works in tech companies, where people experiment all the time. But I’d argue that for regulated industries it’s even more important.
When mistakes are celebrated, not punished, they bubble up very quickly. And that means you rely as much on a healthy risk culture as you do on multiple layers of control and governance. Which, in turn, means you can innovate and change more quickly at the same time as running a safer business. Win, win, win.
At Octopus Money, we hold company-wide meetings every two weeks and ask anyone to share a “stumble” out loud to the rest of the business. It keeps learning fast, egos low, and fear out of the room.
We don’t get these wind-shift moments very often. Let’s step up. Targeted support might not be the only destination, but it could be the wind that gets us moving again if we’re all willing to adjust.
Ruth Handcock is CEO of Octopus Money
