The wealth management industry is struggling with a changing customer demographic in which a new generation of tech-savvy clients have higher expectations of the products and services they receive.
That’s according to Gautam Samanta, global head of BFS at NIIT Technologies, the global IT solutions provider.
“The customer’s expectation has gone up significantly,” he says. “In some form, I think that wealth management lagging a bit. I would say because you see today’s millennial generation which are absolutely digital savvy.”
“With the changing population and the new generation of people coming in more and more, I think that is becoming more and more pronounced.”
That sentiment is echoed in a recent PwC report, which found that 69% of high net worth individuals (HNWIs) now use online or mobile banking solutions, while only a quarter of wealth managers offer digital channels beyond emails to communicate with their clients.
“In terms of the experience they get either from social media or making certain online purchases at home they expect at least that much from their service providers or their bank or somebody managing their funds,” says Samanta.
As other industries embrace technological innovation, wealth managers could find themselves in serious difficulties in the future, should they fail to adapt to new client expectations, he says.
“So I think the gap is going to increase significantly. People talk about the digital generation and in terms of asset and wealth management I think it’s actually been more of a digital emergency.”
According to PwC’s report, wealth management firms should be much more tech advanced, given the products and services they generally deal with. “In an increasingly complex world, where a portfolio manager may, for example, have to evaluate more than 200 different investment products for a client, technology will be vital to keep the job both do-able and scalable for a growing audience,” it reads, calling for a “change in mindset”.
The consultancy firm’s report goes on to suggest wealth managers need to know more about how their clients think. “The wealth management industry worldwide remains stuck at a very early stage of this digital journey, stymied by complacency, a focus on a traditional way of doing things and a widely held belief that clients are resistant to any form of digital audit trail.”
For Samanta the wide-ranging regulatory and compliance requirements that have reshaped the industry in recent years have held wealth managers back, putting many market participants under pressure and unable to embrace the technological revolution seen in the fintech space. Many within the industry have found their bottom lines under pressure, with profitability difficult to come by in recent years. Now is the time to look to a more agile approach to services, in order to better connect with the customer base, to meet technological demands, he says.
“Technology teams within the asset wealth management can embrace and take the journey on to remain customer centred, to be agile and nimble to offer the right solution to the client.”
And using automation to streamline and connect a firm’s processes, wealth managers should be able to contain and reduce costs – which will ultimately boost client appeal by changing pricing models. That can further be sustained by utilising cloud services, in order to allow for quickly scaling up and down the range of products and risk management strategies in the organisation’s armoury.
“It could be important to apply technological advances to the middle and back office, where automation can help you to save costs because if you are under pressure with people’s expectations, the charges and fees could go down,” says Samanta.