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Dave Simpson, GBST

How technology will impact the wealth management client experience in 2021


Technology is transforming the client experience within wealth management. David Simpson (pictured), Head of EMEA at GBST, examines how firms in the sector are working to modernise legacy systems to manage 21st century digital requirements, while controlling spending and reducing risk for the industry and its participants.

The concept of a paperless society was conceived in 1978 by Frederick Wilfrid Lancaster who at the time, noted: “The paperless society is rapidly approaching, whether we like it or not… We may choose to ignore the electronic world, but this will not make it go away.”

We’re still some way off achieving Lancaster’s paper-free vision, but the electronic world and a digital presence in everyday life is getting notably stronger each year. This shift is clearly apparent within wealth management. Rather than replacing traditional services, technology enhances them and will again prove central to improving how the sector interacts with clients in 2021 and beyond.

The Covid effect

Although the move toward digital has been apparent for years, adoption has been hugely accelerated by the Covid-19 pandemic. The need for a full and speedy online experience to conduct transactions is essential when offices are closed, and paper-based processes aren’t possible. The various lockdowns and restrictions have forced wealth managers to adjust working practices and get their digital services in order so that clients can continue to access what they require. Many firms with legacy technology have found transitioning to remote working and online functionality challenging. The crisis has highlighted many inefficiencies in existing solutions and limitations in accessing systems digitally, leading to a poor online customer experience, and the need for manual workarounds and rekeying of information.

Beyond the necessity of keeping business moving, many wealth management organisations have also come to appreciate the benefits technology offers from greater efficiency and enhancing the customer experience through a broader, slicker range of offerings which enable greater personalisation and affordability. As people of all ages become more comfortable with apps, online banking, user portals and virtual meetings, their expectations of receiving a seamless, omnichannel experience from their wealth manager have also increased.

APIs (application programming interfaces) can play an important role in helping wealth managers improve the digital experience they deliver. APIs provide consistent, compatible connections between systems, allowing wealth managers to integrate their platforms more easily with modern digital front ends and other services, while managing costs. Modern technology gives firms the ability to adapt and align their digital proposition to the rapidly changing needs of the business and its customers.

Embracing data

Alongside the improved efficiency and customer experience, modern technology also offers wealth management firms access to richer client data. Historically, gaining a holistic view of a client’s financial data was dependent on the organisation’s ability to analyse its own data and the customer’s inclination to share other information. Now new tools using open APIs, artificial intelligence and machine learning enable wealth managers to draw data from across disparate internal systems and combine with third-party data.

Open Finance initiatives, where consumers have access to – and can share with trusted parties – their entire financial footprint are gaining traction across the globe. In Australia, the Consumer Data Right (CDR) is paving the way for greater access to personal financial data, while in Europe, the Second Payment Services Directive (PSD2) requires banks to provide customer data to third parties through open APIs. In the US, the private sector, rather than country-wide legislation, is driving adoption with the Financial Data Exchange (FDX) bringing financial services organisations together to work towards giving consumers secure access to their financial data. Initiatives like this will prove key to helping wealth managers garner a deeper understanding of customers, enabling them to offer a more refined and bespoke service.

Enhancing advice through technology

Using technology, wealth managers can provide clients with 24/7 access to their data and slick digital processes, tools and calculators that help them better engage with their finances. The adoption of machine learning can help wealth managers bridge the advice gap by providing a personalised service to a broader range of clients with simple needs and lower funds, while the human touch remains core to supporting the back-end administration of wealthier clients and navigating more complex scenarios.

Machine learning has huge potential to help wealth managers understand this new mass of available data, extending their analytics capabilities to create a more insightful and meaningful client experience. Through analysis of accessible data and user behaviour, wealth managers can anticipate their client’s personal financial needs and provide individualised recommendations at the right time, adding value and reinforcing the benefits of the service they provide. In turn, this can strengthen relationships, drive engagement and increase loyalty.

Machine learning also has potential to create further efficiencies in the back office. It can help firms reshape operating models to automate functions, generate reports, recognise exceptions, and highlight risk, driving up straight through processing rates to lower costs.

As the world slowly makes its way out of the pandemic, it remains to be seen how quickly the global economy will recover from the shock of the last year. But by embracing modern wealth management technology, digitalisation, greater access to data and better system integrations, wealth managers can help improve the long-term finances of a greater number of individuals, as well as their own back-end administration.

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