Hitting the Digital Accelerator

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This is a sponsored article from SS&C Advent.

In recent months, the business models of almost every business have come into question. As we transition from the old normal to the new world, every business has had to take stock and consider how appropriate, robust and suitable their operating model is, and how they can quickly adapt. It would not be overly dramatic to say that almost every business, in every sector in every market has been affected. Wealth Management now certainly is a sector with enormous potential for disruptions.

Debate over wealth management disruption is not new, and to some extent, the incumbents had started the transformation towards a 21st century digital business model. Some markets, for example large parts of Asia, are well advanced. In these more developed markets, we are seeing many firms planning to move from their first generation digital tools to a new, more powerful and interactive business model.

The key to this new approach is to focus on digital engagement. Firms now need to deliver digital services that are multi-functional and allow sophisticated two-way communications across the whole client journey. This engagement starts from the initial prospecting, through on boarding and then needs to include every facet of ongoing business.

First generation digital tools are based around extending and turning client reporting into digital and interactive communications. These deliver a limited range of services and are seen largely as an improvement and complementary services to the existing business model.

New digital tools need to be far more ambitious, being broader and more interactive. These platforms can transform the existing business, and should be integral to all aspects of the wealth management business

No time to stand still
Advent’s research, recently published as “C Suite Confidential – Ten Key Tech & Ops Trends”, delves into this digital transformation and illustrates the scale of the problem. According to this report almost one third of respondents reported that their organisation is only at the earliest stages of digitalisation. And while a quarter gave their organisation a “good” rating, no participants reported their firm is as digitalised as it wants to be.

Currently the only reliable, timely and effective way to communicate with clients is through digital channels. Even the most traditional and conservative of clients will expect these new channels to be provide additional benefits. Wealth management executives urgently need to re-evaluate the priority and speed of bringing digital transformation to their business models.

As a result, firms with no experience, or with stalling projects are suddenly at risk of being left behind. It is important to find ways to begin the digital journey and to learn and adapt as you progress. The only way to adapt is to get started now, and give clients digital engagement tools. Work with them, and internal stakeholders, to continue to evolve as you move forward. The digital transformation is a steady and constantly evolving one, not a big bang.

It is critical that firms develop their internal culture and ownership and lessen reliance on third party advisors. Wealth managers must keep in mind that their markets have changed — and will continue to change. No one has proven experience or answers in the new world. “Buying in” advice may not be the best answer. Digital will fast become part of a firm’s DNA and therefore must be owned and influenced within the organisation.

Ensuring that the company culture changes to fully embrace a digital business model is not purely down to technology. People need to adapt and change too. As do working practices. As an example, wealth firms should continue to develop social media skills and presence, across multiple platforms and functions, and not see this as a departmental function. Compliance is an area that will need to adapt, to become an enabler of this changes and not a constraint on change. In addition, firms need to keep a balance; digital for established firms will be a complementary and additional channel and not a replacement. There may be a time when offline channels become redundant, but your clients and prospects should be driving that now.

Digitalisation as a true differentiator

A firm’s digital channel and self-service capabilities are essential factors in the client service experience. Digital channels bring the ability to communicate in a timely manner and offer many interactions. Stakeholders can benefit from the ability to self-service information, in a controlled environment.

Digital tools should enable, encourage and enhance the interaction between clients and their wealth advisors. Often digital initiatives focus on enabling a “self-service” model but firms need to be far more aspirational than this. Engagement tools need to build and develop relationships between clients and advisors, so that decisions and discussions can feel collaborative and with absolute transparency.

Digitalisation should also bring additional benefits to clients. For example, being able to store and access key documentation in a secure and single source, track their private assets and third party accounts and access and discuss research on an as-needed basis.

All of these aspects increase trust and strengthen relationships. However, wealth firms need to be constantly re-evaluating the full engagement and be able to react accordingly to instructions and engagements with clients and third parties. Communications may be the key to the digital experience but if you cannot also act in an accurate and timely manner, this trust will become quickly eroded.

Wealth managers need to ensure the digital experience includes new clients. Digital processes can transform the initial value a new client perceives they are receiving. Again, a well-designed digital onboarding process is key. This need to ensure transparency and efficiency throughout the process.

Transparency itself is a key benefit that a well-designed digital experience can provide. Stakeholders should be able to view their current and in-flight business activities. The ability to access data, on demand, as well as engage with the wealth manager in an effective and timely manner as is key. Digital services should as far as possible be workflow enabled to support transparency and aid client trust.

Digital business lines as discussed do not only benefit the external stakeholders. Internal stakeholders gain too. Better, faster, more transparent information is an obvious benefit, wherever you sit in the value chain. However, the internal wins go far beyond that. Embracing this approach should reduce the human touch points, making the operation more scalable with a simultaneous reduction in operational risk. A well-designed business model will liberate human assets to work more smartly. Key staff will be less constrained by laborious and repetitive tasks, and be able focus on enhancing the client experience and creating both corporate and client value.

For those firms with ongoing projects, now is the time to review and evaluate progress. In many cases, the original business case will have become invalid. Projects need to be realign to fit the new world and where necessary brave decisions need to be taken to stop and change direction. Project should be interactive with simplified deliverables and regular and frequent improvements as part of a constant evolution. For firms who have yet to start, the most important aspect is to move. Education will come with experience.

The business model for every firm in every sector needs to be re-assessed. Whilst firms with digital platforms may feel they are at an advantage, if these initiatives are not able to realign to the new world, wealth managers who deploy smart technology could easily surpass these firms. The playing field has, to an extent, been levelled and the opportunity to show clear differentiation has never been clearer.

Visit https://www.advent.com/demo-request/ for more information.

This is a sponsored article from SS&C Advent.

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