Fintech and human expertise knit together as a hybrid model for wealth management.
As technology continues to shape and influence society going into the tail end of the 21st Century, it is also influencing a change in wealth management through improved customer experiences, insights and access to new markets.
A recent survey conducted by Temenos in association with Forbes reveals that while the majority of wealth managers are already using technology to segment clients, a third feel they have more work to do in this area. One of the key areas that has evolved is the use of analytics as more data becomes available. The survey shows that 40% of wealth managers felt analytics helped them make sense of massive amounts of real-time data across numerous portfolios.
Product marketing lead at banking software provider Temenos, Aggie Anthimidou, explains that wealthy investors are not much different from rising affluent investors in that both markets embrace a tech-forward attitude. “Technology, from the client’s perspective, should facilitate more active portfolio management, unlock new insights through predictive analytics and reveal opportunities that may exist in alternative investments,” she says.
Anthimidou says wealth managers are responding to this need by integrating accounts, building more sophisticated mobile apps, and using analytics and artificial intelligence (AI) to segment their clients more finely. “This emerging paradigm positions technology as the great enabler of wealth management’s most potent value proposition: expertise and relationships,” she says.
Personalised customer experiences
Looking ahead, the key differentiator for wealth managers is likely to be the delivery of personalised customer experiences. Temenos Wealth offers a Robo-Advisor module with goal-based investing to help wealth managers capture customers’ key life goals while offering them highly personalised products and services.
The role of blockchain in wealth management
When talking about technology moving forward, the role of blockchain frequently arises. Blockchain is digital information stored in a public database, or a decentralised electronic ledger of transactions. Going forward, said 82% of respondents, they expect blockchain to play an important role in wealth management providing benefits such as powerful security/fraud detection, meeting regulatory requirements, and offering transactional transparency. Futurist Gerd Leonhard is quoted in the Forbes/Temenos survey as saying that blockchain is primarily useful as a new way of facilitating database transactions much faster for 95% less cost. “It won’t be so much about money itself as about contracts and data and logistics,” he notes.
Hybrid model between fintech and personal expertise
Despite all factors pointing towards a more positive attitude to the adoption of technology, previous studies by Forbes show that younger investors still favour human expertise and interaction with an advisor. “Eight in 10 wealth management executives in the survey saw technology as being a significant or highly significant factor in whether a wealth manager can gain market share, notably among younger investors, who are rising in importance,” Anthimidou says.
She notes that the relationship between the top end client and their relationship manager is fundamental, with trust playing a key role. “This model is unlikely to change dramatically, with hybrid advisory solutions providing the best of both worlds and most likely to become the evolving standard,” she says.
The win-win is that clients will be able to access self-service capabilities through fintech interfaces while advisors’ time will be freed up to focus on higher value-added activities, such as onboarding more clients or spending more time with those top end clients.
Improved communication interfaces
Anthimidou points out that technology with further facilitate communication and interaction via the use of digital channels enabling investors to view any changes in their portfolios or contact their relationship managers using video chat technology.
Jeremy Boot, senior product manager at Temenos, says that relationship managers currently use tablets to support face-to-face client meetings, which often take place outside of the office. “These devices enable them to perform real-time actions such as portfolio reviews and investment proposals,” he says.
However, he adds that wealth managers are increasingly making mobile apps available to their end customers so they can:
- Consult on their portfolios;
- Stay in touch with their relationship managers more easily; and
- Sign-off on contractual documents such as proposals.
Reduced operating costs
Boot says that while the fundamental wealth management business model is unlikely to change dramatically, technology and automation can help wealth managers push into new client segments to provide new revenue streams. “It can also help supplement the advisors’ services, meaning advisors can service more clients or spend more time with high value clients.
“Using modern technological infrastructure such as cloud deployments can definitely help reduce operating costs.”
Read the full Forbes Insights/Temenos global report “The Next-Generation Wealth Manager” here.