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Robo advisor pushes deeper into core banking systems

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The robo advisor SigFig is rolling out a new automated advice platform built to be integrated with core banking systems as part of an effort to deepen its relationship with financial institutions.

The San Francisco-based startup launched Tuesday a digital wealth management platform called CoPilot, which CEO Mike Sha said will work to better analyze the data that banks have on clients.

“Our strength and our weakness are almost perfectly complimentary with the strengths and weaknesses of banks,” Sha said. “We are good at product and design, the user experience, and technology. But we don’t have the scale or distribution or the customer base. Banks have great brands and stability and trust, but what they usually don’t have is an obsession around innovation and technology.”

The new digital tool provides the standard features of automated advice platforms, including portfolio rebalancing, tax loss harvesting and digital client onboarding. But Sha said where it's different is in its ability to integrate with banks' core systems.

SigFig’s first institutional partner for CoPilot is Citizens Bank, and its financial advisors will be able to access the platform later this year. This is the second partnership between the two firms. In 2017, the bank started offering SpeciFi, a low-cost digital wealth management offering from SigFig, directly to its customers.

"A lot of banks are risk-averse and slow to innovation. But you do find banks that want to change. I would say Citizens Bank that has been forward-thinking in wanting to change and adapt in how they do business and serve their clients,” Sha said. “They have been a great bank to work for.”

SigFig is also providing its robo-advice tech to industry giants UBS and Wells Fargo. In August, UBS shut down its U.K.-based digital advice business, SmartWealth, and sold the technology to SigFig. The startup also has the financial backing of UBS, the mutual fund provider Eaton Vance and the private investment firm Bain Capital.

The $158.6 billion-asset Citizens has taken steps to make its services digital first. This year the Providence, Rhode Island, bank launched an online-only bank called Citizens Access. It has invested heavily in a data and analytics operation to target consumers who may want a loan or another financial product.

The technology from SigFig allows the bank to focus on building its wealth management service, said Larry Seidl, head of investment products at Citizens Wealth Management, the bank’s investment arm.

“Clients want professional management and access to investments generally only available to higher-net-worth investors. This platform will allow Citizens to add capacity and grow in this area while providing a seamless and efficient client experience,” Seidl said. “We are removing the manual processes and streamlining the client interaction, which today requires physical signatures and can negatively impact client experience at times.”

Citizens joins other banks that have added automated advice tools for their advisors. Fifth Third Bank tapped Fidelity to launch its OptiFi platform for mass market clients in June. Webster Bank launched an automated advice platform with the support of its broker-dealer LPL. Bank of America is among the larger banks that have developed platforms and added broker support for automated advice services.

But unlike peer offerings focused on smaller retail clients, Citizens said the platform will be for advisors working with clients in the mass affluent and affluent segments.

For SigFig, the enterprise offering furthers its intent of becoming a direct competitor to legacy core systems providers such as FIS, which offers its own robo-advice platform built in partnership with one of SigFig's competitors, Trizic.

“We’ve been predicting this for a few years and it makes a ton of sense to both SigFig and their clients,” said Doug Fritz, founder of F2 Strategy, a technology and marketing consultancy for the wealth management industry. “For SigFig, they’ve already won a seat at the wealth digital table through their robo. For their clients, they need something more compelling for their wealthy clients. Expanding that relationship with one vendor ensures that client experience across wealth and engagement models is consistent and modern. It’s a win-win-win.”

The bank needs to realize it's outsourcing its “most important client touch point in the future: the digital experience,” Fritz said.

“While there are some great vendor offerings today, delegating control to a vendor might someday come back and bite a lot of firms," he said. "Locking into a vendor means that your own digital teams may no longer be building the muscle memory needed in the future. It means that your client experience is predicated on someone else’s technology vision.”

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