Wealth management questions may be the same as ever, but answering them is putting banking services under new scrutiny. The influence of digital technologies—from robo-advisers to online accounts—means there is unparalleled choice in how wealth is managed. With changing client behaviors and the demand for greater value, the unpredictability of the wealth management function puts banks at risk of obsolescence.
By applying digital technologies to their workforce and capabilities, alongside the human touch, wealth managers can add new value—not only serving and anticipating clients’ needs but also ensuring the health of their own organizations.VIEW THE REPORT [PDF]
Three digital factors
Digital transformation of the wealth management function is based on:
The perceived value of traditional advice:
Customers are no longer willing to pay a premium for undifferentiated services and advice. Digital technologies demand that employees are flexible and adaptable—and they can be applied to transform the value exchange between themselves and their clients.
Customers demand a lifestyle partner:
Private banks must open themselves up to an ecosystem of relationships to fuel sustainability and growth and avoid being swiftly replaced by robo-advisers, new entrants, artificial intelligence or a combination of the same.
More value must be squeezed from data:
Customers are redefining loyalty—one or two phone calls a year and one face-to-face meeting is insufficient to add value. Wealth managers should use their “data gold” to offer differentiated services that drive new profit streams.
of wealth managers’ time is spent on non-revenue generating activities, such as compliance, risk or filling in forms.
improvement in client retention and an increase in net new client acquisition through digital
increase in assets through 360° view of the client and using analytics
Wealth managers have seen their margins decline by one-third over the last three years.
Actions for next-generation wealth management:
Invest in hybrid wealth management: Re-evaluate roles and reset priorities to become an organization that marries human and artificial intelligence, bringing the low cost and seemingly limitless analytics of digital together with the human touch—where it is understood that wealth management involves emotions and families.
Become your client’s lifestyle partner: Avoid the legacy trap by becoming an ecosystem wealth manager. Many wealth management firms are building state-of-the-art integration capabilities using open APIs or moving toward platform strategies that will mean they are better positioned in a market that is crowded with FinTechs.
Exploit big data to create value: Seek out new, proactive client service opportunities. By making full use of existing data, wealth managers can drive new value, from existing client investments and from differentiated, bespoke advisory services.