Eight in 10 wealth firms fail at technology
Wealth firms rushing to embrace technological developments in a bid to attract clients should think twice after research found that a shocking 84% of digitisation projects are doomed to fail.
An estimated £20bn ($24.6bn, €22.3bn) of investible wealth will be transferred to beneficiaries every year, according to wealth management fintech provider Nucoro.
Technology is touted as the solution to help wealth managers build a relationship with the next generation and retain them as a client.
But only 20% of wealth professionals currently have rapport with these potential future customers. who are set to collectively inherit an estimated $4trn (£3.2trn, €3.6trn) of wealth by 2030.
Practical advice?
The fintech firm provided little detail about why such a large proportion of technology/digitisation projects fail – or what can be done to avoid this outcome.
Embracing a tech solution simply for the sake of having one, however, is unlikely to deliver the intended outcome; whether it be improved customer service, time saving or staying ahead of the competition.
The cost of technology is also rarely a one-off, as continual development is required to ensure it is fit for purpose and meets all regulatory requirements.
Focus on clients
“As with any investment in a financial business, a central motivation should be to ultimately produce outcomes that can benefit customers,” said Nikolai Hack, chief operating officer and managing director for the UK at Nucoro.
“Adopting bolt-on enhancements like digital customer experiences or automations for back office functions are the best routes to upgrading the services to existing and potential clients due to their accessibility, scalability and affordability.
“Wealth managers must embrace technology. The industry is heavily regulated, and it therefore faces a large administrative burden, but technology can minimise the time and resources spent on tasks that are very basic but high in volume.”
The fintech provider found that, at the end of 2018, robo-platforms were already managing $257bn and this could grow to $1.26trn by 2023.
Tailoring is key
Nucoro also believes wealth managers could provide a solution to the growing advice gap.
“An unprecedented transfer of wealth is expected to be served by a shrinking pool of advisers. They will be dealing with a client base that is likely to need them to become more flexible and deliver a more modern and personal service,” Hack said.
“This could mean more agile tech-driven firms will need to fill the gap. Alternatively, the existing firms could push to streamline their operational functions and manage overheads – cost cutting essentially – while handling an influx of orphaned clients at the same time.
“For the next generation, their needs and expectations are centred on interacting with their finances via digitally accessible platforms that link their money, their everyday lives and their goals to the future.
“Greater customisation of service levels will also be key here.”
An estimated £20bn ($24.6bn, €22.3bn) of investible wealth will be transferred to beneficiaries every year, according to wealth management fintech provider Nucoro.
Technology is touted as the solution to help wealth managers build a relationship with the next generation and retain them as a client.
But only 20% of wealth professionals currently have rapport with these potential future customers. who are set to collectively inherit an estimated $4trn (£3.2trn, €3.6trn) of wealth by 2030.
Practical advice?
The fintech firm provided little detail about why such a large proportion of technology/digitisation projects fail – or what can be done to avoid this outcome.
Embracing a tech solution simply for the sake of having one, however, is unlikely to deliver the intended outcome; whether it be improved customer service, time saving or staying ahead of the competition.
The cost of technology is also rarely a one-off, as continual development is required to ensure it is fit for purpose and meets all regulatory requirements.
Focus on clients
“As with any investment in a financial business, a central motivation should be to ultimately produce outcomes that can benefit customers,” said Nikolai Hack, chief operating officer and managing director for the UK at Nucoro.
“Adopting bolt-on enhancements like digital customer experiences or automations for back office functions are the best routes to upgrading the services to existing and potential clients due to their accessibility, scalability and affordability.
“Wealth managers must embrace technology. The industry is heavily regulated, and it therefore faces a large administrative burden, but technology can minimise the time and resources spent on tasks that are very basic but high in volume.”
The fintech provider found that, at the end of 2018, robo-platforms were already managing $257bn and this could grow to $1.26trn by 2023.
Tailoring is key
Nucoro also believes wealth managers could provide a solution to the growing advice gap.
“An unprecedented transfer of wealth is expected to be served by a shrinking pool of advisers. They will be dealing with a client base that is likely to need them to become more flexible and deliver a more modern and personal service,” Hack said.
“This could mean more agile tech-driven firms will need to fill the gap. Alternatively, the existing firms could push to streamline their operational functions and manage overheads – cost cutting essentially – while handling an influx of orphaned clients at the same time.
“For the next generation, their needs and expectations are centred on interacting with their finances via digitally accessible platforms that link their money, their everyday lives and their goals to the future.
“Greater customisation of service levels will also be key here.”
source https://www.kideboymnyama.com/2019/10/eight-in-10-wealth-firms-fail-at.html
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