Hatch AI helps financial advisors obtain better insights about their clients.
The company is currently early-stage but has already tested its proposition in partnership with one of the UK’s biggest life insurers and asset managers; it is also in talks with various others. Hatch AI’s focus is on supporting the digital transformation of the UK financial advice market where, according to 2018 ABI data, 90% of the market is advised. The technology could, however, work more broadly.
The company’s platform uses speech technology, machine learning and natural language processing (NLP) to analyse the goals and risk appetite of clients in real-time. This gives financial advisers an enhanced understanding of their clients which in theory enables them to give more targeted financial advice. The company calls this ‘Human+’ – the artificial augmentation of human advice.
Hatch AI’s platform also provides a dashboard which aggregates client information into one place and uses integrations such as open banking to pre-fill client data. This can help expedite financial advice and decreases reliance on manual processes.
The technology that underpins Hatch AI was developed over three years by computer scientists at the University of Edinburgh. Interestingly the technology was tested across multiple industries before a proposition for financial services was developed. The team started in multi-media, for example working with the BBC on a €10 million project to drive productivity and automation in media monitoring. This involved using NLP to extract text from foreign news to be used in BBC local news.
The team then saw an opportunity to deploy their technology in financial services. CEO Joseph Twigg has 15 years’ experience in the investment industry, having previously been Global Head of Strategy and Business Management at Standard Life Aberdeen, the UK’s largest asset manager. Hatch AI’s technology has other potential use cases too – for example in the legal sector, where Joseph noted that 70% of the current technology could potentially be redeployed.
THE OXBOW PARTNERS VIEW
Hatch AI provides an interesting solution to the growing knowledge and advice gap. As the responsibility for retirement planning has shifted from governments and companies to individuals, the need for clear advice and planning assistance has increased. Unfortunately, financial advice remains expensive and difficult to obtain for the majority of people. The industry needs to become more efficient to reach a wider set of the population.
The majority of activity in this area has focused on D2C distribution ‘robo-advice’. Well-known examples include Betterment in the US and Nutmeg in the UK, other examples include Scalable Capital, Moneybox and Plum and wealthsimple.
Unlike these firms, Hatch AI is a Supplier InsurTech – it does not seek to acquire customers through distribution but rather offers a technology solution for the industry. This is one of the reasons we like Hatch AI’s proposition: supplier robo-advice propositions are few and far between. That said, a number of white label robo-advice solutions are now coming to market – look out for our future blog on this topic.
We like that Hatch AI’s approach to robo-advice does not seek to replace human advice but rather augments and expedites it. In this sense the company aligns with a thesis at Oxbow Partners: that human interaction is still a very important part of the buying process for financial products. But clearly we see scope to build efficiency through digital transformation of the advisor model – freeing up advisor time through the automation of non-value-adding tasks and enhancing face-to-face time through the rendering of good information for example.
Oxbow Partners has supported numerous clients on the digital transformation of their business models, both in agent-led and online markets. Please drop us a line if you would like to discuss your business with us.