If there has to be an area in the banking and financial sector where digitisation was almost considered a futile attempt, it has to be wealth management. Wealth managers were always dubious about digital transformation until the pandemic narrated a different story. Post the vaccine’s arrival, every industry was considering distinct steps towards innovation, including the wealth management industry.
Why Digitisation in Wealth Management?
In order to attract current generation towards financial advisory, wealth management enterprises have to think through their strategies and re-invent themselves. While millennials, to a certain extent, accept the traditional advisory methods, Gen Z’s are peculiarly interested in everything digital. The three important reasons for digitisation in wealth management are:
- Rising Customer expectations
The arrival of technology in each industry has led to rapid innovation, which resulted in higher customer expectations. WM (Wealth Management) industry is a no stranger to this, as customers are expecting a more seamless assistance approach in improving their short term and long term financial goals. Hence, adapting to the digital world has become more of a ‘do or die’ situation.
- Legacy systems
The major hindrance for most of the banking and financial enterprises are the legacy systems, as they act like a barrier for any innovation. The only way to eradicate the legacy architecture is by re-building the entire system. Some wealth managers worry about the revenue that goes in this renovation, but considering the future, now is the time for taking this digital step.
- Global competition
The upcoming new gen wealth and asset managers are equipped with strong technical foundation, and hence, they might pose a big threat to the existing wealth management enterprises. Hence, shifting to a digital world is the only chance that can help traditional wealth managers compete with the new wave of wealth managers.
Advantages of Digital Wealth Management
Here are a few advantages of going digital for the wealth management industry:
- Accurate analytics for better customer knowledge
Compared to baby boomers, current generation expects a more detailed way of financial assistance in order to invest in any asset. In order to understand their preferences, wealth managers need to have a holistic view of their customers and it is possible in digital wealth management, thanks to data analytics. It collects past financial data of customers to provide useful insights on their financial preferences with personalized advisory option.
Recommended Read: It’s time for Banks to raise the bar with ‘Analytics for ME’
- Improved customer engagement
With the help of capable technology like AI, RPA, etc., there are a lot of financial advisory applications which gives suggestions on different kinds of investment based on the income and expenses of a customer. This attracts new age users automatically increasing customer engagement.
- Better decision-making ability
Using different kinds of analytics, wealth managers understand a comprehensive view of the entire WM ecosystem. This helps them in better decision making regarding the risk and return factors of the company.
- Way forward for innovation
Some capabilities of technology have proven to be a blessing for the financial industries, yet there is a lot waiting to be explored. So, having a platform that can embed any kind of further implementations that aids in better customer experience is a revolution for WM industry.
- Revenue growth and increase in cost efficiency
With the right platform and technology, wealth managers possess the right strategy to attract customers with minimal effort. This obviously leads to significant revenue growth and cost efficiency in the longer run. Also, with such technologies, WM industry experts can concentrate on targeted marketing, which can improve cross sell and up sell campaigns.
Key areas of digital wealth management
There are several areas in the WM industry where digitising can prove helpful. Here are some of them:
- Customer onboarding
With strong tech platform abilities like ML, NLP, etc., customer onboarding has seen a diverse range of innovation like facial/audio recognition, automated document verification, etc., and has reduced the overall time from several weeks to few minutes. Some fintechs and Regtechs are also looking to simplify regulations to facilitate further improvisations in the WM industry.
As mentioned before, customers expect a detailed and more personalised approach by the wealth managers. Hence, the intervention of technology is imperative as tools like analytics help WM industries understand their consumer’s financial journey and help to improve their financial health.
- Client interactions
The most important aspect of WM industry is to interact with the customers efficiently. Be it a financial amateur or an expert, every customer will have different preferences and having a right communication platform will help wealth managers provide specific financial assistance. The answer to improve communication lies with the customer, as their data can be leveraged to improve and personalize one-on-one interactions.
Key trends in Digital Wealth Management
Personalised financial products never fail to attract customers hence, going an extra mile in WM industry will aid them to strengthen their establishment. Hyper-personalisation helps wealth managers by providing a distinct view of each consumer by gathering data from different segments. From personal details like age, occupation, etc., to financial details like income-to-spend ratio, etc., hyper-personalisation can provide a long-term, foolproof financial guidance for customers.
Automation is a gift from technology to the financial industry as it simplifies sensitive data processing with minimal errors. Also, it can process multiple data at once, which saves a lot of time and effort, which gives stakeholders ample time to think of any innovation. Many CEOs predict that the inclusion of automation in the wealth management industry can significantly improve the quality of products offered.
- Digital Transformation
Most investors in the WM industry prefer including digital implementations in the existing architecture, but, one can find the actual result only with an end-to-end digital transformation. This is because of the legacy systems, especially in the large enterprises, that are not compatible with all kinds of tech innovation. Digitally transforming a wealth and asset management company will not only help to gain customer traction but helps to sustain the ever-changing trends.
Recommended Read: Digital Transformation Strategy: The Secret Behind All Successful Banks’ Digital Journey!
While automation is a gift, Analytics is a blessing in disguise as most financial decisions are based on the reports provided using different kinds of analytics. Be it customer-based or enterprise-based, analytics help in the sustenance of a digital wealth management industry. All you need is a right partner who can help you with a strong digital platform that contains an accurately designed analytics tool.
Having a digitally robust wealth management is most stakeholders’ dream, but it surely comes with its own obstacles. From complex regulations to unplanned strategies, one mistake might break an entire digital foundation. Hence, it is highly recommended to choose the right partner for re-imagining your digital wealth management enterprise. We, at Aspire Systems, help you build an end-to-end resilient wealth management platform with our technical expertise. Our solution not only helps you have a superior customer experience but also aids in overall operational excellence.
- Digital Assurance Testing: The ‘Hulk’ of Your Financial Organization’s Digital Marvel - September 28, 2021
- Cut the Cord with Legacy Systems and Let Digital Payments Fly Sky High - September 7, 2021
- Credit Unions – Stand in a Good Stead With These 5 Trends! - September 3, 2021