The recent advancements in technology has meant that most firms have started to acquire a more digital approach in their business outlook, however, going ‘digital’ has different meanings for some managers. According to a survey conducted by PWC, the wealth management industry is one of the least tech-literate sectors of financial services. In fact, only 45% of wealth managers surveyed by Wealth Dynamix & PAM in 2016 believed they were doing enough to keep up with developments in technology and digital. This is particularly worrying as their major future clients are tech-savvy individuals. Millennials have growing economic clout; Deloitte claims the generation are expected to control over $24 trillion (£18.5bn) by 2020.
Growing economic clout
Millennials have growing economic clout; Deloitte claims the generation are expected to control over $24 trillion (£18.5bn) by 2020.
These soon-to-be, if not already high net worth individuals (HNWIs) have had technology integrated into their everyday lives, with 90% of millennials checking their smartphones within 15 minutes of waking, as said by April Rudin, a Global Wealth Marketing Strategist. More specifically 69% of HNWIs are using online/mobile banking, and yet only a quarter of wealth managers are currently offering digital channels beyond email according to a study conducted by PWC. In order to improve services and move with the times, many companies need to adopt a digital strategy. However, many global firms are operating under out of date systems. One third of wealth managers believed a digital strategy will increase their firms’ efficiency, but PAM found that only 56.6% of wealth management firms claimed to have a digital strategy in place. This shows there is a disparity between wanting a digital strategy and understanding what this means for implementing at individual firms.
There is a growing expectation for wealth managers to be technologically proficient, companies need to figure out what digital means in the wealth management industry and in particular for them as a business. For Wealth Dynamix, digital means leveraging technology to enhance existing business operations such as being closely attuned to how client journeys are evolving and understanding consumer behaviour and expectations. This in effect would contribute to an increase in client acquisition and retention. Implementing a digital strategy to a business would allow employees to manage complex relationships and connect both clients and employees effortlessly. Digital leveraging would reduce missed opportunities and maximise growth and profit. As a tech focused company, our aim is to use technology to improve opportunities and overcome the challenges faced in the industry.
There is an evident increase in client demand and expectations from wealth managers to be more technologically friendly. In the World Wealth report, Capgemini found that 80% of HNWIs under 40 indicating they would leave their wealth management firm if it fails to provide an integrated-channel experience. Adopting a digital strategy would have endless benefits for wealth managers, encouraging long term growth and stability. In order to achieve this, companies will need to rethink most aspects of their business, from looking at back office operations to how they communicate with clients. There are some uncertainties around the significance of technology in the wealth management sector, as many would argue in favour of the importance to remain a human-led business. Despite this, many wealth management CEOs acknowledge the benefits of digital as a means to improve efficiency and engage more broadly with clients to compliment face to face operations.
There is nothing new or ground-breaking in saying that technology continues to have a growing influence on our day to day lives and more importantly on how businesses are run. Crucially though, in order to stay relevant in the current market, wealth managers must consider embracing technological innovations. In doing so they can improve the client experience, target new prospects and enhance management information and business insights to strengthen relationships across all aspects of the business.
To sink or swim, the decision to implement a more practical method today could be pivotal for companies’ forthcoming success.