Technology redefines financial services - FT.com What does the video game Donkey Kong have in common with your investment portfolio? Very little you might think, yet plans being drawn up by UK wealth managers to keep customers engaged are being heavily influenced by game designers. Seven Investment Management has hired the team that worked on game titles such as Donkey Kong and Golden Eye to build a new portal, which runs on mobile devices, that allows customers to "play" with their investments, viewing and managing their portfolios in an interactive way. The idea behind the project is to use game design, mechanics and thinking to improve the way that complex financial information is explained. "Coming out of a dark period for financial services we saw an opportunity to connect with financial clients through gaming," says Mark Betteridge, a software designer behind 7IMagine. We felt we could engage with clients using some of the attributes that attract consumers to computer games - usability, engagement and interaction. The 7IM app allows investors to see their portfolios, creating a personalised hub for each client. Later versions will allow customers to take information from other places to create a comprehensive view of what they are worth on any one day. Interactive portfolios offer one example of the evolving partnership between the technology community and financial services sector as providers try to keep their wealthiest clients happy. At an event this year, titled "How technology is redefining financial services," chief executives were asked how advances in technology are already changing services and discussed the changes in relation to start-ups such as Nutmeg, the online wealth manager, iZettle and Ixaris in the payments sector and online currency exchange The Currency Cloud. The debate concluded that technology has created entirely new business propositions in financial services, such as peer-to-peer financing or crowdfunding, just as technology giants such as Google make serious forays into financial services with the introduction of a new payment system called Google Wallet. However, it seems as though investment clients are not yet seeing the benefits of these changes. According to the Scorpio FutureWealth Report, Helpful Investment Technologies, less than half of the wealthy investors questioned felt their wealth manager had the appropriate technology to meet their needs. In particular clients felt that managers lacked the right technology to help explain portfolio strategies. The picture in the Americas is marginally better. But in Europe, and particularly in the Asia Pacific markets - where digital dexterity is at its peak, there is an urgent need for an upgrade," says Sebastian Dovey, managing partner at Scorpio Partnership. Wealthy clients want quality information and tools, as well as the flexibility to connect their various financial interests. In the future, Mr Dovey says, the ability to share and compare portfolios will also be important. Evolving client expectations mean that financial services companies need to keep up with change and adopt new technologies to survive. "Players will be left behind if they don't adapt," warns Mr Dovey. Companies misunderstand what technology represents to their models. They feel threatened by it and fail to see that it is an extension of the relationship model - not a replacement of it. If the financial services industry does not adapt to technological developments then clients will operate independently and the companies will be cut out. Perhaps wealth managers should look to the banking sector for a steer on how to improve their services and change the way they talk to clients. Caixa Bank of Spain, which offers more than 60 smartphone applications, has introduced Stock Music to help users track stock market performance through music. The volume of the music varies based on the performance of the stock market, allowing the user to keep general track of the market without having to check any other applications. Through services such as PayPal, customers can already send and receive money using just an email address, while Facebook recently announced plans to allow users to pay for goods online using their social media login details. Tools already available or in development at banks include voice payment, in which authentication and payment instructions are spoken into the phone, and self-pay, in which mobile "near field communication" technology, combined with 4G connectivity, reduces the need for tills and queues in shops. The Capgemini 2013 World Banking Report says that many banks already use mobile messages to welcome customers and inform them of new products. HDFC Bank in India, for example, presents messages in either Hindi or English, depending on language preference. One of the most advanced forms of mobile marketing used is location-based messaging. Bank of America plans to deliver real-time deals and offers to its customers and is testing a service that would let customers purchase and pay for items by simply scanning a QR (quick response) code. A group of Nordic banks has also introduced a person-to-person mobile payment service, while BNL Bank in Italy is testing contactless payments. "The retail banking and wealth management industry is really working hard to attract wealthy individuals," says Jean Lassignardie, chief sales and marketing officer, global financial services, Capgemini. These people are more demanding and recognise that the old model is no longer enough and needs to change. At ABN Amro, which has regularly released new features in its mobile banking application, customers can now give names to their accounts, as well as attach photos to them - bringing them closer in line with social media. "What drives us is what our customers want - they dictate what we do," says Frans Woelders, chief information officer at ABN Amro. We believe that if you're not at the cutting edge of technology then you are taking a serious risk for your business. Other innovations include the CommBank Property Guide from Commonwealth Bank of Australia, in collaboration with property listing website, realestate.com.au, which provides details of properties, including monthly mortgage payments, sales histories and real world views. Users can also elect to add contactless technology, including Bump, which lets them pay friends by bumping handsets together, and PayPass which supports "tap and go" payments at the checkout lane. "As well as introducing new services using advanced technology, banks are also introducing iPads and tablets in the branches to support customer transactions," says Rohit Talwar, chief executive of Future Research, a consultancy firm that helps people to shape the future of their businesses. In Barclays staff now have iPads to use when they are talking to customers. The boundaries between technologies are blurring. Messages sent via email, texts and social networking sites from the banks will start to appear in the same way. Companies using iPads and tablets include ICICI Bank in India, Barclays in the UK and Huntington Bancshares in the US. Bank of America, meanwhile, has embraced full-scale mobile marketing by running advertising campaigns on smartphones. A popular application in the US lets customers deposit checks by taking a photo using a smart phones and sending the electronic picture to the bank. Pierre Combelles, head of mobile commerce business at GSMA, predicts that the technology investments by the financial sector will be directed at making services more personalised towards the consumer. "Everything will start to be tailored to individual customers," he says. From using your phone to board a plane or instead of a key to get into a hotel room - to buying your groceries during a train journey to be collected when you get off - technology is here to make our lives easier. For technology to work it has to make things simpler for the customer and those companies that get it right will go far. Money in many varied guises In the US, money is beginning to look a bit odd, writes Tracy Alloway in New York. There are new digital payment systems such as Ven, or the Google-funded Ripple, and even crypto-currencies that capitalise on the public's apparent distrust of central banks. There are internet upstarts that look suspiciously like banks, but are not. PayPal and Xoom are transferring money while peer-to-peer lenders, such as Lending Club and Prosper, are determined to cut banks out of the equation. Rather than sit on the sidelines, banks and other US financial institutions are slowly harnessing new technologies themselves. Take Western Union, the 162-year-old company that started by merging telegraph businesses midway through the 19th century. For decades, it has used its vast network of agents to transfer money. Since 2011, however, customers have been able to make transfers in M-Pesas - a digital currency developed by Safaricom, the African mobile phone operator. In some respects, Western Union looks more like a Silicon Valley start-up. It has opened shiny offices in a trendy corner of San Francisco with the aim of poaching millennial techies. Western Union Digital now houses more than a hundred employees, compared to 10 just a year ago. At JPMorgan Chase, technology stretches to the most mundane of banking services. Corporate treasurers using JPMorgan's cash management platform access what amounts to an internal social media site. They can also manage a company's finances from a (voice-encrypted) smartphone app. Titan Bank, a community bank in Mineral Wells, Texas, says it plans to offer personal loans to customers through peer-to-peer specialist Lending Club. It's a curious stance for a bank whose raison d"être is presumably to lend out deposits in an efficient way. But it's symbolic of an existential banking crisis sparked by the intermingling of modern finance with a plethora of new technology. The high price of failure The number of high-profile technical failures in the financial services industry in recent years is alarming, writes Chris Dutta. Over the past 18 months there have been serious issues at RBS, the Tokyo Stock Exchange, Knight Capital, LCH.Clearnet, and now, just days apart, Everbright, Goldman Sachs and Nasdaq. Why are these major software failures happening? In some cases, it is due to under-investment and reliance on legacy systems. This, of course, has been exaggerated by the difficult economic environment of recent years as companies seek to cut costs. But under-investment is not the only cause. Arguably the biggest catalyst of collapse is the absence of testing for new software. In spite of the increasing complexity of the automated trading landscape, improper quality controls and lack of rigorous testing are the norm. The potential cost of a system failure is huge - think of the estimated £175m incurred by RBS following its online banking meltdown, the resignation of the Everbright president and the wider impact on global markets of stock exchange failures. Yet at a senior level, software testing is rarely discussed. Instead, it is considered a matter for "IT" and tech-savvy individuals rarely make it on to company boards. I have found that financial companies do not always receive the right advice at the start of a new technology project. Major issues then tend to come to light late on and the result is a trade-off between meeting timescales and delivering an acceptable level of quality. Chris Dutta is director of Piccadilly Group, a specialist in trading systems