Inside Look: Scotiabank’s cloud-based wealth management tool

Scotiabank has launched a new cloud-based wealth management tool for both advisors and retail customers that leverages artificial intelligence (AI) and machine learning to make and monitor investment goals.

The Smart Investor platform was created in collaboration with financial services firm SigFig, which has already stood up white-label wealth portfolio management solutions for the likes of Wells Fargo, Citizens, UBS, Cambridge Savings Bank, as well as smaller banks in the U.S.

Scotiabank’s tool differs from those banks in its scale and focus, Dan Mercurio, head of strategic partnerships at SigFig, told Bank Automation News. The platform — which went live as a pilot program for the bank’s wealth management team in October 2021 — is designed to be used by the more than 7,000 Scotiabank advisers in branches across Canada, he added.

“That’s the largest advisor base using our platform all at once in our company’s history,” Mercurio said.

Wealth management tools are historically targeted to those who are already wealthy, said James Popalis, Scotiabank’s head of omnichannel strategy. The new tool is unique in that it is designed to be used by both retail customers and the bank’s wealth management advisers, he said.

The $917.5 billion Toronto-based bank will migrate almost 2.5 million customers with investment accounts to the platform during the next several months, Popalis added, and will make the platform available to all Scotiabank customers.

“We’re after the mass customer,” Popalis told BAN. “We’re really trying to help … the general population in Canada really achieve their goals and their dreams, and really educate them on what investment means. This is a true retail mass market play.”

Overcoming onboarding and regulatory challenges

Scotiabank was looking to build a single platform for both its retail consumers and its wealth advisors. The bank previously advised clients using multiple platforms — mostly built in-house — for various investment-related products, which meant numerous ways of onboarding and fulfilling customers’ needs.

“It was a process that was extensive for both the customer and the adviser, mainly because of the system-hopping and the manual nature of fulfilling, and so the first major initiative that we tackled together was automation and simplification of the customer adviser,” Mercurio said.

Advisers having access to a wide range of products and services to offer clients led to an uneven experience — a customer at one branch might receive a different recommendation from a similar customer at a different branch or through the website, he said.

This created a regulatory challenge, since Canadian regulation National Instrument 31-103 requires banks to ensure they are selling securities that are appropriate for a client.

“We lack product parity in all the channels, meaning we can’t sell the same product shelf at the branch versus contact center versus mobile versus online,” Popalis said. “This program unified the product selection, all channels, … [the] best way to onboard our customers, and then straight through to fulfillment.”

Scotiabank also sought to create an experience that allowed customers to both engage with advisers and use the tool independently for a consistent personalized customer experience across all channels, regardless of the originating branch or individual adviser.

Building the Smart Investor solution

Creating personalized recommendations was a top priority for the bank. With the Smart Investor solution, once a customer completes a profiling questionnaire, an algorithm scans appropriate products or services and curates a list of recommendations, Mercurio said. The tool streamlines the workflow process and automates recommendations to product proposals, onboarding and fulfillment.

“It’s all curated in the interest of the customer more than anything else,” Popalis said. “In the past, the advisors would … try to pick and select on their own. So from a regulatory perspective … it really satisfied those particular needs because we truly are looking after the customer’s best interest.”

SigFig simplified onboarding by integrating the tool — via application programming interfaces (APIs) — with existing data to pre-fill all available customer information into the system. Transactions are also enabled within the platform.

In addition, Smart Investor integrates into the custody platform of Scotiabank, so everything is processed through real-time APIs that allow the bank to onboard accounts, Mercurio said.

“There were five or six different custom integrations that we built — one, as an example, to generate real-time price quotes within the platform,” he explained. “So we’re able to provide market pricing in real time within the platform by building the integration.”

The tool is hybrid, with some components hosted by SigFig on premise while others are cloud-based, but the information can be stored in the cloud and accessed across channels.

“With this application, everything is stored in perpetuity in the cloud and very accessible to you and Scotiabank, as well,” Popalis said.

Smart Investor uses AI and machine learning to monitor accounts’ progress against customers’ goals and then leverages algorithms to provide investment advice.

“We’re reading that information in real time and providing tips and personalized suggestions on ways in which a customer can change their behavior, whether it be making an additional automatic contribution or taking advantage of what we would call a windfall or additional money that that they’re hitting the account to kind of put to work against a long-term goal,” Mercurio said.

What’s next: Customer use by midyear

The solution, which is currently being rolled out across Canada, is already changing how customers and advisers interact, Mercurio said.

“What we’ve learned as we’ve worked with Scotia is there’s this really rich ability to use that content that’s being displayed within the platform to actually facilitate conversation,” he said. “When I was … watching advisers use it, they were turning their screen around at the same time to allow a customer to kind of follow along in the process. And that is somewhat of a new behavior, given the richness of the user experience that we created for them.”

Scotiabank plans to expand the platform for customer use by midyear, Mercurio added.

“The interesting difference between this platform that we built with Scotia is the ability to be truly omnichannel — so not a separate platform for customers and advisers,” he said. “But if a customer wants to go fully on their own, they can do that. If they want to work with an adviser, they have the flexibility to do that.”

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