Legacy infrastructure is a burden in many a sector, but truly in financial services. Private banking is in need of an update in technology, according to experts, if not an overhaul. Patrick Brusnahan speaks to firms on this strategy
Is the investment going to flood into the sector or are private banks going to hold steady for another year?
Silvia Mensdorff-Pouilly, SVP banking & payments, FIS
Expectations around wealth management have shifted significantly over the past 12 months. The pressure is coming from all sides – from clients and competitors to regulatory bodies. In order to keep up, wealth managers need to digitally transform their business. This means significant investments in enabling remote client service, both for clients spread across a large area and a more distributed workforce.
However, the results from the 2021 FIS Readiness Report show that only one in 10 UK wealth management and private banking firms are planning significant increases in technology when compared to a worldwide average of closer to a third. On the other side of the pond, we found that US companies are focussing more of their efforts on client retention, as opposed to placing all their efforts in securing new customers in other generations.
For firms that are looking to invest next year, the three key areas below are where I believe there is a real opportunity to deliver growth and increase profits while prioritising the user experience.
Focus on the experience
With increasing competition, innovative client experiences are becoming an increasingly crucial differentiator. Today, clients expect to be able to manage their accounts using any channel they want, whenever they want. Wealth managers need to find a way to face this new demand for flexibility while managing cost. As a result, 57% of wealth and retirement firms plan to spend more on front-office technology in the next 12 months.
Unleash the power of advanced analytics and AI
Firms may be convinced that data and analytics tools hold the key to unlocking better decision-making in the front office, but first, they all need modernised technology. Artificial intelligence (AI) and machine learning tools offer compelling benefits as you seek to extract more data and maximize its potential. 43% of wealth and retirement firms surveyed responded that they will invest in enhanced analytics to drive competitiveness in the year ahead.
Embrace cloud and BPaaS for agility and scalability
As wealth and retirement firms seek to build more comprehensive and responsive risk management capabilities – including cybersecurity – they are increasing their reliance on cloud-based applications and turning to Business Process as a Service (BPaaS) providers. These scalable solutions also create a flexible environment for accelerating the deployment of technologies that drive growth. 36% of wealth and retirement firms plan to shift to a more cost-effective operating model, such as managed services or BPaaS, in the next 12 months.
Christina Di Nolfo, head of solutions, Delta Capita
Private banking and wealth management are built on the cornerstone of providing superior and individualised customer service. Pre Covid, many standard business interactions were conducted in person as a matter of course, however Covid accelerated the need for ‘digital’, but what does ‘digital’ actually mean.
For some private banking and wealth management firms, digital could be synonymous to simply automating back-office processes, which in themselves are key to taking cost out of the business, enabling operations to function within a remote working environment and quite frankly, long overdue. This type of process digitisation can be considered to be necessary to keep up with the competition, but alone does not provide a competitive advantage, as they are internally focused as opposed to necessarily enhancing customer centricity.
Businesses have proven that they can operate digitally and remotely and as a result, customer expectations of how they are interacted with, the level of information that is at the fingertips of any representative they liaise with, and the ability to perform in a high touch and personalised manner, has increased.
It is important that wealth management and private banking looks to strategically carve out a roadmap of how they can increase customer satisfaction in a digital age and maintain a high touch human approach using technology which is available to them, not only improving back-office functions in a digital way, but also enhancing customer experience and engagement, looking to increase customer satisfaction, whilst decreasing customer effort.
Some may have pursued the holy grail of ‘digital-only’, purely to find that their customers are caught in a quagmire of annoying chatbots and confusing IVR selection menus, with seemingly no unicursal. This has in many cases proven to be counter-productive to increasing customer satisfaction.
Therefore, the two key trends which I expect to see accelerate further in 2022 are:
Complete fulfilment of seamless customer journeys and integrated customer communications across online, mobile and traditional phone channels, with video and real-time capabilities. Where business can be conducted on a customer engagement platform with a robust audit trail for compliance and the ability to transact, whether this be for concluding real-time agreements and acquiring signatures or financially transacting in a secure environment.
The ability to augment existing infrastructure and digital stacks with an incremental approach, whilst harnessing all customer relevant data at the point of interaction with the client and being able to publish back to the systems of record. Advisers and representatives need to be furnished with the high-quality customer information in a timely manner to enable them to be more proactive and advise their clients whilst being able to push rich media at the point of contact which is personal and relevant.
To provide this level of customer service, it is important that firms shift towards more integrated and omnichannel solutions. A seamless end-to-end customer engagement platform that improves customer centricity should certainly be considered when developing a strategic digital roadmap for 2022.