Technology: the new fuel in wealth management relationship banking

Wealth management clients prioritise relationships, so technology companies must work to strengthen that bond, not replace it.

May 24, 2017

Wealth management clients prioritise relationships, so technology companies must work to strengthen that bond, not replace it, says Aggie Anthimidou, Product Marketing Strategy at Temenos.

Everyday banking is not an emotional affair. Most of us are more than happy to interact with an app or chatbot rather than a person if it can help us to set up a standing order, check a balance or pay a bill. We value speed, efficiency and ease of use above face-to-face interaction when it comes to carrying out ordinary transactions, and that is why online and mobile banking is seeing exponential growth across the world.

Wealth management is different. When we invest our money with the help of a trusted adviser, we consider our goals, our dreams and our tolerance for risk. We may even confront our own mortality, laying plans for our family’s future after we have gone.

According to the research, high-net-worth individuals state that they will remain loyal to wealth managers when those managers move firms. The bond between manager and client is strong, and the latter would rather go through the inconvenience of switching firms to remain with someone who they value – something that is rarer in high-street banking.

Temenos research “The Rise of Bionic Wealth” shows that when we are making these big decisions, we still value the human touch, even if we are happy to use technology for other financial transactions.

But if wealth management clients value relationships, it’s not to say that they don’t value technology. We know from the same research that wealth management clients also prioritise transparency – the ability to see exactly where their money is going, what it is doing and the decisions that have been made.

This is something that can be best accomplished with a good technology platform that places information at their fingertips. Clients who are used to seeing their current account balance and making payments at the swipe of an app want to know that their wealth manager is also changing with the times and leveraging technology to benefit their wealth. That’s why, in the wealth management space, fintech is evolving to fit alongside human relationships, to improve the service that a good and trusted investment manager can give, rather than replace it entirely.

The human element is important, then technology comes in to make the job better. This is creating hybrid systems where administrative tasks and compliance needs can be automated and managers alerted immediately to changes in risk levels in portfolios or other vital pieces of information.

Technology frees up managers to work with more clients, or to spend more time with existing ones, and still give the level of individual service that clients expect. In addition to this, technology can give clients access to their own portfolio information, covering their two key priorities – transparency and relationship – at the same time.

At Temenos, our experience in the wealth management industry tells us that client expectations vary by country.

In Asia, for example, personal service is greatly valued, while in Latin America the wealth management industry focuses on a market that might be seen as ‘mass affluent’, and clients are happier with a higher level of automation. When adopting technology, wealth management businesses and private banks must be mindful of the expectations of the individual market that they are serving.

Rather than forcing clients to accept a technology that is foreign to them, technology should be used in a regionally-specific way, so that the expectations of clients are met. If used well, fintech can support and enhance regional differences in investing behaviours.

As well as supporting regional differences, fintech can help solve the conundrum at the heart of the wealth management industry – how to personalise the offerings aimed at the many different layers of clients who are described as ‘wealthy’, from the mass affluent to ultra high-net-worth individuals.

Fintech can improve the experience of wealthy clients at every level, offering anything from customised robo-advice for the merely wealthy to a technology-supported but fully bespoke service for those at the top end of the market.

Those using it must always be aware of the expectations of their clients, ensuring that new technology is used to enhance, but never to alienate.

Because technology can make things personal, wealth managers can use it to give customers what they really want rather than offering an experience based on demographic assumptions. The lines between different generations of wealth management clients are beginning to blur, and the industry is discovering that segmentation in modern wealth management is not as simple as offering whizzy technology to the millennials and personal relationships to older Baby Boomers.

Not all members of the older generation are technology averse; nor are all millennials fond of web-only communication. Both generations can throw up surprises. Recent research from Accenture shows that millennials like to shop in bricks and mortar stores in order to feel and smell the merchandise on offer1, while another survey revealed that Baby Boomers are so obsessed with technology that they are far more likely to fiddle with their gadgets during dinner than more restrained millennials2.

The wealth management industry is facing many dilemmas at present, as it grapples with how to manage the expectations of different generations, regions and customers with many different levels of assets. Technology can help on every front, as long as it is seen as an opportunity to make things better, instead of another issue to solve. Because this isn’t a case of ‘robots versus humans’ but a case of ‘robots enhancing humans’ – and by grasping this, wealth managers can build strong businesses for the future.

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