The Financial Services Industry Is Seeing Significant ChangeWhile working with clients daily, across several sub-verticals of Financial Services, we have seen a tremendous change and transformation. There has been an emergence of challenger banks and how important the overall customer experience has become, in winning new customers from younger age demographics. There has been the rise of the mortgage fintech SME’s and the popularisation of online mortgage platforms wherein an end to end mortgage application could be fully automated. In insurance, we have seen the move towards enhancing how brokers and partners are managed digitally while new up and coming insurtech businesses are going fully digital and even algorithmically-driven. However, with all of this change, some parts of the industry have stayed the same. With the impact of a global pandemic and no timelines for a full recovery, it is now forcing those more traditional businesses and sub-verticals to catch up in terms of innovation and digitization. That is certainly the case for the Wealth/Asset Management and Private Banking space. In recent months I have had more conversations with these kinds of businesses than I have in the last 2-3 years combined!
The Growing Challenges For Wealth/Asset Management Cannot Be Ignored Any LongerRight now, this area of the industry is experiencing significant challenges and transformation. In the years following the 2008 financial crisis, the Wealth/Asset Management and Private Banking space had progressively adapted to the increased competition, the change in client demands, and the impact of tax transparency. Today, however, there are new challenges and opportunities for the players in the market to be aware of if they are to be successful.
- I have already alluded to the rise of digital and how digital transformation has drastically altered how the mortgage and insurance landscape looks. Now it is the Wealth/Asset Management and Private Banking that are experiencing in-depth digitalization. The emergence of big data, advanced analytics, and well-funded robo-advisor platforms has forced them to evolve.
- With new generations, businesses see generational turnover in their client bases. From the recent conversations I have had with companies, the Wealth/Asset Management and Private Banking industry would appear to be seeing this more and more. With recent generational shifts, clients are demanding a far more engaging overall experience. Clients want simplicity, and they want their advisors to know them. Without digitization, any business in the industry would struggle to provide a holistic advisory service, especially when they try to factor in the range of products and services they offer in conjunction with the multiple jurisdictions in which they operate.
- Regulation continues to be a headache for Wealth/Asset Management and Private Banking businesses. It has always been a complex environment to operate within. Now there is an ever-increasing number of regulations to keep track of. Each requires continued investment and cost to remain compliant with said regulations, which can infringe on profit margins.
The Rise of The Client ExperienceThe rise of digital and an evolving client base has put a lot of pressure on Wealth/Asset Management and Private Banking companies to overhaul their end to end client experience. That means the introduction of fully branded self-service and portal functionality that is easy to use and has as few clicks as possible. In every other aspect of their lives, clients can help onboard themselves in their own time through a slick interface, wherein they can upload their passport/proof of address/utility bills, etc. for all KYC/AML checks, and have their distinct login. Now they are demanding this of their Wealth/Asset Manager and Advisor teams. The onboarding process is only the beginning; clients want to bypass human interaction for mundane tasks or queries. If they can log a case themselves and track their progress, they will most certainly take that option. They can log in to their challenger bank app of choice right now and check their accounts and holdings in one view, so they expect their Wealth/Asset Manager of choice to be no different. It is when there is something urgent or critical wherein a client wants the ability to escalate and have human interaction with a dedicated client advisor.
Managing Demands for Omnichannel Communication With Client SegmentationAutomation and self-service work very well for a lot of Financial Services businesses, and as we have explored, Wealth/Asset Management and Private Banking are no different. However, in this specific space, automation and self-service work to a point. Not all clients are created equal. They can vary based on total assets under management, the asset classes their portfolio relies on, the additional services they avail of with a Wealth/Asset Manager, etc. On this basis, a business must be able to segment their client base accurately, and the segmentation can differ based on strategy and a variety of other factors. Example:
- Client A has £200million in assets under management spread across equities, bonds and cash, and some alternative asset classes like derivatives, cryptocurrency, and real estate. They have properties in 6 countries, travel frequently, and have their assets spread across multiple jurisdictions. In addition to this, they frequent a ‘freeport’ to store their art.
- Client B has £7.5million in cash savings accounts, with a proportion of capital in short-term US Treasury bonds via the Vanguard Short-Term Treasury Fund.