Temenos/Forbes Insights Report - AI and the Modern Wealth Manager – Latin America

As digital wealth technology including artificial intelligence (AI) increasingly finds its way into the hitherto traditional world of wealth management, a new balancing act has emerged that will define the future of the industry

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2018 Forbes Insights/Temenos global survey ‘AI and the Modern Wealth Manager’ – LATAM results

As digital wealth technology including artificial intelligence (AI) increasingly finds its way into the hitherto traditional world of wealth management, a new balancing act has emerged that will define the future of the industry: an advisory service that blends man and machine to give a better service and improved results for increasingly tech-savvy high-net-worth individuals (HNWI) and newly affluent clients.

To better understand how digital wealth technology is playing out on the ground and where the technology is leading, Temenos and Forbes Insights surveyed 310 wealth managers (WMs) and high-net-worth individual investors across the globe about their acceptance and use of digital wealth technology including AI in wealth management. Of the total number of respondents, 27 per cent came from Latin America.

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Temenos/Forbes Insights Report - AI and the Modern Wealth Manager – Latin America

As digital wealth technology including artificial intelligence (AI) increasingly finds its way into the hitherto traditional world of wealth management, a new balancing act has emerged that will define the future of the industry

DOWNLOAD REPORT

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Temenos/Forbes Insights Report - AI and the Modern Wealth Manager – Latin America

As digital wealth technology including artificial intelligence (AI) increasingly finds its way into the hitherto traditional world of wealth management, a new balancing act has emerged that will define the future of the industry

DOWNLOAD REPORT

The survey reveals the trends that will have the biggest impact for retail banks:

56

%

changing customer behavior and demands

39

%

changes in macroeconomic cycle

34

%

new technologies

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Temenos/Forbes Insights Report - AI and the Modern Wealth Manager – Latin America

As digital wealth technology including artificial intelligence (AI) increasingly finds its way into the hitherto traditional world of wealth management, a new balancing act has emerged that will define the future of the industry

DOWNLOAD REPORT

Africa and the Middle East share many common features: young populations, high smartphone penetration rates, and problems with unequal access to banks and banking services, particularly in rural areas.

These demographically young and fast-growing regions include hundreds of millions of consumers who are growing up with a deep attachment to their phones and the benefits that the internet has to offer. Historically, banks across the Middle East and Africa may have been slow to react to the demographic and technological changes around them, but this is no longer the case. Over two-thirds of African and Middle Eastern bankers (68% v 58% globally) now say adapting to new demands will have the biggest impact on their businesses.

Temenos/Forbes Insights Report - AI and the Modern Wealth Manager – Latin America

As digital wealth technology including artificial intelligence (AI) increasingly finds its way into the hitherto traditional world of wealth management, a new balancing act has emerged that will define the future of the industry

DOWNLOAD REPORT

To better understand how AI is playing out on the ground and where the technology is leading, Temenos and Forbes Insights surveyed 310 wealth managers and high-net-worth individual investors across the globe about their acceptance and use of AI in wealth management. Of the total number of respondents, 25 per cent came from the APAC region.

The clear message from the study shows that with the growing deployment of AI solutions for wealthy clients a new type of wealth manager is emerging, with APAC leading the way.

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Temenos/Forbes Insights Report - AI and the Modern Wealth Manager – Latin America

As digital wealth technology including artificial intelligence (AI) increasingly finds its way into the hitherto traditional world of wealth management, a new balancing act has emerged that will define the future of the industry

DOWNLOAD REPORT

The Asia-Pacific retail banking market is diverse, reflecting the different levels of social, economic and financial institutional development. It ranges from the near universal coverage found in the more developed markets of Australia, New Zealand, Singapore and Hong Kong to the emerging market of Cambodia, where only 21% of people over the age of 15 have a bank account. It also includes India, where government policies have pushed inclusion by shifting state transfers, pensions and benefits directly into accounts or onto biometric smartcards. Accordingly, Indian account ownership has jumped from 35% in 2011 to 80% today.

However, bankers in The Economist Intelligence Unit’s survey see common themes. Within the Asia-Pacific region, changing customer demand will have the biggest impact on retail banking in the next three years. Regulatory trends are less of a concern in Asia-Pacific (40%), compared to Europe (46%) and North America (56%). Bankers in Hong Kong and Singapore seem to benefit from the more tech-friendly “try it and see” approach of their own regulators. Both the Hong Kong Monetary Authority (HKMA) and the Monetary Authority of Singapore (MAS) have opted to create “regulatory sandboxes” to encourage innovation. These sandboxes allow banks and FinTechs to trial their ideas while involving only a limited number of participating customers. However, the situation is very different in Australia, where bankers have come under fire from the regulator due to poor risk management, high fees and widespread mis-selling.

An April 2018 report by the Australian Prudential Regulation Authority into the Commonwealth Bank of Australia (CBA) made clear that “a widespread sense of complacency has run through CBA, from the top down”.2 The subsequent loss of 20m customer account details only compounded the likelihood of significant reputational damage.

Although Australia has not been Asia-Pacific’s leading example of customer-centric, innovative, fast and frictionless banking to date, this may change with new competition from smaller players. New competition should accelerate the digitalization process that could help restore the reputation of Australia’s bigger banks. The environment will also change with the federal government’s required phased implementation of open banking commencing in July 2019 by the big four: the CBA; the National Australia Bank; the Australia and New Zealand Banking Group; and Westpac.

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Temenos/Forbes Insights Report - AI and the Modern Wealth Manager – Latin America

As digital wealth technology including artificial intelligence (AI) increasingly finds its way into the hitherto traditional world of wealth management, a new balancing act has emerged that will define the future of the industry

DOWNLOAD REPORT

Regional change is driven by changing customer behaviour and demands according to 55% of banking survey respondents
Latin American banks see a bigger impact coming from new entrants than their peers in the rest of the world (48% vs. 36% globally)
For established banks, new payment players are the biggest threat according to 51% of respondents, followed by neo-banks (23%)
Survey respondents think that in-house innovation centres (51%), accelerator/ incubator programs (48%) , and creating closed bank hubs (48%) are the best way to innovate

The report, written by the Economist Intelligence Unit (EIU) on behalf of Temenos, explores the theme: “Whose customer are you? The reality of digital banking in Latin America”. This regional report explores the developing situation for retail banks in Latin America and derives from the recently launched global which surveyed 400 banking executives globally and was conducted by the EIU and Temenos. The regional report emphasizes the need for Latin American banks to further develop their digital banking efforts in order to improve their products and services, restructure their cost base and attract new customers who may have never banked before. Legislation is also encouraging bank and fintech collaboration to deliver digital banking to the unbanked.

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Temenos/Forbes Insights Report - AI and the Modern Wealth Manager – Latin America

As digital wealth technology including artificial intelligence (AI) increasingly finds its way into the hitherto traditional world of wealth management, a new balancing act has emerged that will define the future of the industry

DOWNLOAD REPORT

Latest Temenos Multifonds Every Fund Survey key findings:

78% of the asset management industry believe ETFs will sustain current growth rates
62% predict increasing convergence between ETFs and mutual funds
Operational systems seen as the top challenge and risk
1 in 4 feel asset servicers are not keeping pace with ETF growth and complexity

With ETFs breaking through the US$5 trillion mark at the beginning of this year, the increasing complexity of products is ratcheting up the technical and operational pressures on asset servicers, such as fund administrators, according to the findings of the latest Temenos Multifonds Every Fund Survey.

In a global survey of over 150 asset managers, custodians, third-party administrators and professional service providers, Temenos Multifonds has identified that the asset management industry remains very bullish on ETF growth. 78% of respondents thinking ETFs will sustain their current stellar growth rates. Strong growth is predicted across all geographic regions, with 30% expecting the biggest growth rates in Europe, 29% in Asia and 20% in North America. Coupled with this rapid growth, convergence between ETF and mutual funds is expected to accelerate, with 62% of respondents predicting increasing convergence over the next 2 years.

However, this growth brings both challenges and risks. The biggest challenge highlighted in offering ETFs is operational technology and systems, followed by regulatory compliance, and external connections to exchanges and participants. The biggest ETF risks most concerning the industry were liquidity risks and operational errors, cited by 34% and 20% of respondents respectively.

As a result, not all service providers are currently keeping pace with the increasing ETF growth and complexity, according to 1 in 4 respondents. However, the good news is that those asset servicers who can fully support ETFs will have a competitive advantage moving ahead, with 83% of survey respondents highlighting this fact.

Regarding the findings of the Every Fund Survey, Oded Weiss, Managing Director of Temenos Multifonds, comments:

“While fragmented legacy systems and bolt-on surround technologies may have coped in the past, the asset management industry is increasingly realising that this approach is not fit for purpose moving ahead. Servicing ETFs quickly, efficiently and accurately raises particular challenges, and we are seeing an increasing number of clients looking to include ETF servicing in their core investment accounting system, all wrapped up in a single, global platform to handle both future growth and potential future regulation. With global ETF assets predicted to reach $7.6 trillion by the end of 2020, there’s a massive opportunity out there for those asset servicers who get it right.”

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Temenos/Forbes Insights Report - AI and the Modern Wealth Manager – Latin America

As digital wealth technology including artificial intelligence (AI) increasingly finds its way into the hitherto traditional world of wealth management, a new balancing act has emerged that will define the future of the industry

DOWNLOAD REPORT

Fintech innovation, a large populace of unbanked, digital savvy millennials, instant payments, micro payments, mobile or e-wallets, artificial intelligence (AI) and contactless payments are burgeoning in the region. Nothing is as it was. Regulation is also supporting the market shifts.

Banks must evolve their core and focus on delivering a faster, seamless omni-channel customer experience in what will only become a more competitive market. This Tech Research Asia (TRA) report outlines the key payments trends that banks and payment service providers (PSPs) must address to win by 2020 and beyond. We’ve also included a handy checklist at the end of the document for banks and PSPs.

Key points:

Rapid change to real time to continue. Everyone wants and expects real time payments (both international and domestic) across Asia Pacific. Banks and PSPs with platforms that enable this to happen will find themselves in an advantageous position and will also be in a better position for open banking ecosystems.
Changes in customer demographics and behaviours to accelerate. Across Asia Pacific consumers want a great payment experience that is secure, seamless, and convenient across whatever channel or device they want to use, wherever they are. Younger generations are driving and embracing payments innovation, but older generations are also changing. The unbanked are also going digital and mobile to access basic financial services.
APAC will give birth to more new payments technology innovations than anywhere else by 2020.Users in the region also have an appetite and willingness to adopt new ways of paying. AI, open banking and the API economy, predictive analytics, mobile and contactless, blockchain and crypto currencies will all help further accelerate innovation as more providers jump into the payments’ industry.
Great customer experiences coupled with security and convenience will be the key differentiator.Banks are urged to embrace technology advances and re-examine their core processes and business models to win customers and to monetize new revenue opportunities.

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Temenos/Forbes Insights Report - AI and the Modern Wealth Manager – Latin America

As digital wealth technology including artificial intelligence (AI) increasingly finds its way into the hitherto traditional world of wealth management, a new balancing act has emerged that will define the future of the industry

DOWNLOAD REPORT

For the past ten years, Temenos has conducted a comprehensive banking survey, covering areas such as banks’ IT priorities, their challenges towards implementing a digital strategy, their view of the competitive environment and attitudes towards FinTech innovation.

Because the questions posed are largely consistent from one year to the next, our survey tracks how trends and attitudes have changed over time. Moreover, because the respondent sample is highly diverse, both in terms of types of banks and geographic location, the results give a broad view of banking sentiment.

For this year’s survey, we interviewed 248 senior bankers. The interviews were conducted over 3 days at the Temenos Community Forum (TCF 2017), which was held in Lisbon, Portugal. The report was produced together with Accenture, a leading global professional services company.

As a thank you to respondents, we made a donation for every completed survey to the Global Fund for Children.

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