Wealth managers cant afford to drag their

Wealth managers can no longer afford to treat technology solely as a back office function if they hope to continue to grow over the long term.

Wealth managers cant afford to drag their


Indeed, better use of technology is emerging as a significant source of competitive advantage for wealth managers, a new report by EY reveals.

Portfolio Adviser has already delved into the manner in which parts of the wealth management sector are embracing technology, but the new report by EY: Digital disruption and the game-changing role of technology in global wealth management, delves further into the ways in which the ‘digital’ wealth manager can get a step ahead.

According to EY, leading wealth managers are rapidly enhancing their digital capabilities in the face of transformational change at the hands of tighter regulation, changing client needs, shifting engagement channel preferences and the movement of wealth creation toward the Asia Pacific region.

The combination of mobile communication channels, social media, advanced analytics and the cloud will “fundamentally shape client value propositions and operating models of wealth managers in the coming years,” EY writes.

Adding: “The emergence of digital technologies calls into question the traditional reliance on client advisors as the single source of financial advice.”

However, it points out, this lesser reliance on client advisors and a shift towards self-service and digital channels should bring down cost-to-serve.

“This in turn can pave the way for much more affordable value propositions in the growing segment of emerging wealthy,” it said.

A holistic approach

But, while wealth managers stand to benefit from both a lower cost-to-serve number and from possible upselling opportunities as a result of a greater use of technology, EY cautions that: “Many wealth managers are wrongly focusing their digital investments on customer-facing solutions”.

“They can extract just as much value, if not more, from investing in middle- and back-office process improvements that drive operational efficiencies.

Adding: “In fact, the greatest bottom-line impact may come from cost-savings and changes beyond the interface with customers. Digital capabilities provide the opportunity to achieve a marked improvement in core functions, from the front and middle office all the way through to the back office.

The report highlights three areas wherein technology can add value: enhancing client relationships, increased front-office productivity and improved operations at a middle and back-office level.

At a client relationship point of view, EY says, while digital technologies will never replace face-to-face interactions wholesale: “they offer the means to enrich and extend these interactions,”

“Across the industry, digital capabilities and channels are quickly developing into a must-have, not something that sets wealth managers apart from their competition.” This is especially true in regards the mobile channel.

At the same time, as cost pressures continue to impinge on the sector, the number of clients per adviser is growing and, as a result, there is also a compelling need to increase the productivity of client advisors.

To that end, EY writes, “Technology provides several opportunities to increase the productivity of client advisors and reduce the amount of time spent on low-value and administrative tasks.”

“Instant messaging, email, web portals and social networks [for example] provide a cost-effective solution to handling client queries. Web portals can be used to capture know-your-customer data and provide clients with a platform for 24/7 account management. Use of widespread web conferencing facilities and video calling channels such as Skype can be used as a replacement for client travel and face-to-face meetings, whilst offering clients the flexibility of “anytime, anywhere” support,” the consultancy points out.

The third advantage is the ability to create a lower-cost, more flexible infrastructure that can “rapidly adapt to the changing regulatory landscape.”

By no means a panacea for all the problems facing wealth managers today, technology does have, if nothing else, a few astringent properties. And, with all the bumps and bruises the sector has already got, why not use as much salve as possible.


Latest Stories