Rapid developments in technology are not only changing client behaviour, but also impacting business strategies and increasing costs for many wealth firms across the country.
With the industry once again set to undergo significant change this year, consultants at Capgemini and Deloitte have identified the top trends to keep an eye on.
High cost of day-to-day activities preventing firms from investing
According to Capgemini, while firms are under pressure to reinvent their business models and invest in new services, they are being held back by ever-increasing regulatory pressures. Keeping up with business takes 15.3% of firms’ budgets while proposition development and business models get only 14.8% and 14.7% allocated, according to the company’s ‘Wealth Management Trends 2017’ report.
The company recommends taking a balanced approach, focusing on internal and external modernisation, and business model innovation.
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The role of chief data officers
A report by Deloitte, ‘The evolving role of the chief data officer in financial services’, points out that financial firms increasingly need people who leverage data and not just manage it.
With the regulatory focus requiring the gathering of large amounts of data from institutions, it will be important to have staff at management level who can use that data to improve and benefit their firm.
‘For most financial institutions, a huge amount of work in the data space remains to be done, for which traditional management strategies and approaches may be less than well-suited,’ Deloitte said.
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Collaboration between incumbents and fintech companies
Over the last year, what has been dubbed ‘robo-advice’ has clearly been on the rise, with a multitude of new companies springing up, offering low cost services. While some incumbents have developed their own propositions to compete, Capgemini argues that over the next year there will be increased collaboration as ‘incumbents see an opportunity to jump-start their fintech offering’.
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Continued focus on cybersecurity
As the number of ‘touch points’ increase for clients, concerns over data privacy and security will also continue to rise, Capgemini said. This could easily lead to firms getting penalised and held accountable for any lapses in security. To guard against this, investment in cybersecurity is set to increase with consultants identifying staff education as the first line of defence.
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Use of AI-based analytics
As wealth managers look to digitise their services, they have been increasingly looking at ways to harness artificial intelligence to provide more personalisation. Capgemini says that using automated platforms will lead to cost benefits in the long run, while AI can be used for real time financial planning, data aggregation and reconciliation, as well as behavioural segmentation, personalised reporting and risk management.
It said: ‘AI based analytics platforms are expected to become an integral part of the regulatory risk management offerings, helping firms comply with regulatory norms and scrutiny in a more transparent and efficient manner.’
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Focus on intergenerational wealth
Many HNWI’s are expected to start transferring their wealth to younger generations, which once again highlights the need for businesses to invest in digital transformation to adapt to the needs of the next generation.
According to Capgemini, many next-generation business owners are expected to sell, and set up family offices. Therefore the ability to handle large wealth transfers and succession planning, as well as new investment requirements will be an important trend to be on top of.
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Growing demand for digital tools
As clients request more digital interaction, wealth managers are looking to add more digital tools, which can help them become more competitive. According to Capgemini’s World Wealth Report last year, 78.9% of wealth managers would like to pilot new digital tools.
The consultancy expects increased investment in digital capabilities and an attempt to overcome resistance to change.
Leave a comment!
New models of relationships
Capgemini has highlighted three types of business models that it expects to define the propositions of most of the players in wealth management.
The pure automated model, which is for HNW individuals with basic needs, the holistic goals-based financial planning and wealth management model, which focuses on the personal relationship between the client and the wealth manager that includes frequent interaction and the hybrid advice model, which uses both technology-driven and traditional advice models.
Leave a comment!
New fee models
While client demands for fees and transparency shift, so will charging structures. Capgemini argues that firms will need to re-examine their fee models and this will see a move away from traditional percentage fees on assets. Instead, ‘confident’ wealth managers will focus on investment and service fees.
Leave a comment!
Focus on cost-efficient operating models through automation
Capgemini points out that traditional operating models are not nimble enough to adapt to new regulatory requirements or changing client behaviour. By automating routine tasks, wealth managers can cut costs while also improving compliance through a more scalable and flexible back office infrastructure. Robotic process automation can also be used for account rebalancing, customer support, customised portfolio reports and compliance and regulatory reporting. It can also carry out client onboarding and diligence, thereby freeing up staff to handle higher value tasks.
Leave a comment!
Rapid developments in technology are not only changing client behaviour, but also impacting business strategies and increasing costs for many wealth firms across the country.
With the industry once again set to undergo significant change this year, consultants at Capgemini and Deloitte have identified the top trends to keep an eye on.
Leave a comment!
Rapid developments in technology are not only changing client behaviour, but also impacting business strategies and increasing costs for many wealth firms across the country.
With the industry once again set to undergo significant change this year, consultants at Capgemini and Deloitte have identified the top trends to keep an eye on.
Leave a comment!
High cost of day-to-day activities preventing firms from investing
According to Capgemini, while firms are under pressure to reinvent their business models and invest in new services, they are being held back by ever-increasing regulatory pressures. Keeping up with business takes 15.3% of firms’ budgets while proposition development and business models get only 14.8% and 14.7% allocated, according to the company’s ‘Wealth Management Trends 2017’ report.
The company recommends taking a balanced approach, focusing on internal and external modernisation, and business model innovation.
Leave a comment!
The role of chief data officers
A report by Deloitte, ‘The evolving role of the chief data officer in financial services’, points out that financial firms increasingly need people who leverage data and not just manage it.
With the regulatory focus requiring the gathering of large amounts of data from institutions, it will be important to have staff at management level who can use that data to improve and benefit their firm.
‘For most financial institutions, a huge amount of work in the data space remains to be done, for which traditional management strategies and approaches may be less than well-suited,’ Deloitte said.
Leave a comment!
Collaboration between incumbents and fintech companies
Over the last year, what has been dubbed ‘robo-advice’ has clearly been on the rise, with a multitude of new companies springing up, offering low cost services. While some incumbents have developed their own propositions to compete, Capgemini argues that over the next year there will be increased collaboration as ‘incumbents see an opportunity to jump-start their fintech offering’.
Leave a comment!
Continued focus on cybersecurity
As the number of ‘touch points’ increase for clients, concerns over data privacy and security will also continue to rise, Capgemini said. This could easily lead to firms getting penalised and held accountable for any lapses in security. To guard against this, investment in cybersecurity is set to increase with consultants identifying staff education as the first line of defence.
Leave a comment!
Use of AI-based analytics
As wealth managers look to digitise their services, they have been increasingly looking at ways to harness artificial intelligence to provide more personalisation. Capgemini says that using automated platforms will lead to cost benefits in the long run, while AI can be used for real time financial planning, data aggregation and reconciliation, as well as behavioural segmentation, personalised reporting and risk management.
It said: ‘AI based analytics platforms are expected to become an integral part of the regulatory risk management offerings, helping firms comply with regulatory norms and scrutiny in a more transparent and efficient manner.’
Leave a comment!
Focus on intergenerational wealth
Many HNWI’s are expected to start transferring their wealth to younger generations, which once again highlights the need for businesses to invest in digital transformation to adapt to the needs of the next generation.
According to Capgemini, many next-generation business owners are expected to sell, and set up family offices. Therefore the ability to handle large wealth transfers and succession planning, as well as new investment requirements will be an important trend to be on top of.
Leave a comment!
Growing demand for digital tools
As clients request more digital interaction, wealth managers are looking to add more digital tools, which can help them become more competitive. According to Capgemini’s World Wealth Report last year, 78.9% of wealth managers would like to pilot new digital tools.
The consultancy expects increased investment in digital capabilities and an attempt to overcome resistance to change.
Leave a comment!
New models of relationships
Capgemini has highlighted three types of business models that it expects to define the propositions of most of the players in wealth management.
The pure automated model, which is for HNW individuals with basic needs, the holistic goals-based financial planning and wealth management model, which focuses on the personal relationship between the client and the wealth manager that includes frequent interaction and the hybrid advice model, which uses both technology-driven and traditional advice models.
Leave a comment!
New fee models
While client demands for fees and transparency shift, so will charging structures. Capgemini argues that firms will need to re-examine their fee models and this will see a move away from traditional percentage fees on assets. Instead, ‘confident’ wealth managers will focus on investment and service fees.
Leave a comment!
Focus on cost-efficient operating models through automation
Capgemini points out that traditional operating models are not nimble enough to adapt to new regulatory requirements or changing client behaviour. By automating routine tasks, wealth managers can cut costs while also improving compliance through a more scalable and flexible back office infrastructure. Robotic process automation can also be used for account rebalancing, customer support, customised portfolio reports and compliance and regulatory reporting. It can also carry out client onboarding and diligence, thereby freeing up staff to handle higher value tasks.
Leave a comment!