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How to Use Digital Technology to Transform Wealth Management

How to Use Digital Technology to Transform Wealth Management

A few years from now, the asset and wealth management business may expect to face disruptive innovation in the form of shifting consumer expectations, declining profits, rising regulatory pressure, and intensifying competition from fin-tech companies.

By optimizing the customer and advisor experience, digitalizing the platform to boost STP, agility, and cost stabilization, and reducing manual business procedures, asset and wealth management businesses may take advantage of the opportunities presented by the current trends.

The current landscape

Clients are putting pressure on the present client interaction paradigm in wealth management, calling for greater personalization and efficiency in light of the new digital world, where flexibility and convenience prevail. Wealth managers face internal challenges due to declining earnings and increasing restrictions, despite the usual difficulties of adapting to shifting consumer expectations.

The foundation of the conventional approach to wealth management is based on the cultivation of close personal connections with clients, which in turn is supported by many manual processes and face-to-face encounters. This, together with the growing regulatory load, has kept wealth managers from fully embracing digital transformation.

Customers in today’s always-on digital society want innovative digital services that are both quick and easy to use. Similarly, advisers who can effectively create, implement, and maintain financial plans using efficient and dependable tools are more likely to expand their client base and AUM.

The deep domain expertise to lead digital transformation in wealth management resides in banking tech firms like Maveric Systems.

Digital Evolution of Advice

Digital change in wealth management may be seen throughout the entire value chain, beginning with client on-boarding and ending with fulfillment and trade.

  1. Initiating a relationship with a client: Offering options for account opening via video chat, electronic signatures, online ID verification, and bio metric authentication are just a few examples of the cutting-edge technologies that others are adopting to digitize the on-boarding process.
  2. Advice: Releasing a set of mobile apps for banking on the go. The software offers users individualized material, transactional resources, and multi-channel teamwork possibilities. This is an example of how digital technology is being used to revolutionize wealth management.
  3. Help with the sale: During client meetings, providers develop tablet apps to aid relationship managers by leading them through an innovative, adaptable, and interactive sales process and centralizing all pertinent sales operations.
  4. Advice on making financial investments: Offering clients individual “health checks” to help them spot any problems with their assets and get them back on track.
  5. Buying, selling, and other forms of transactional fulfillment: To facilitate stock and fund trading among their clientele, many wealth managers are developing digital solutions that take the form of online social marketplaces.

Conclusion

This new era of digital innovation is upon us. At the same time, the first digital revolution 30 years ago focused on digitizing information with the advent of the internet. Today, the focus is on digitizing assets, wherein anything of value may be reduced to a digital representation and traded like any other commodity. That might permeate all of the private client industry.

Private client advisers are utilizing technology to improve efficiency, save costs, broaden their product offerings, and mitigate risk as they reach out to the upcoming generation.

About Maveric Systems

Starting in 2000, Maveric Systems is a niche, domain-led Banking Tech specialist partnering with global banks to solve business challenges through emerging technology. 3000+ tech experts use proven frameworks to empower our customers to navigate a rapidly changing environment, enabling sharper definitions of their goals and measures to achieve them.

Across retail, corporate & wealth management, Maveric accelerates digital transformation through native banking domain expertise, a customer-intimacy-led delivery model, and a vibrant leadership supported by a culture of ownership.

With centers of excellence for Data, Digital, Core Banking, and Quality Engineering, Maveric teams work in 15 countries with regional delivery capabilities in Bangalore, Chennai, Dubai, London, Poland, Riyadh, and Singapore.

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Top 3 Digital Technologies Transforming Wealth Management in 2023

Top 3 Digital Technologies Transforming Wealth Management in 2023

As 2023 is upon us, leading FIs and banks are aware of the core trends in the wealth-management landscape, setting the stage for one of the most significant digital impacts ever.

Top trends for Wealth Management applicable for 2023

Customers are shifting to Omni-channel. Wealth management clients increasingly begin their investment journeys online, searching for businesses, conducting comparisons, selecting advisors, and following social media suggestions, as they do in many other categories. Digital outreach or digital solicitation frequently motivates clients to act. In some industries, the influence of digitization has been profound.

Mobile interactivity is fast increasing market share. The mobile channel now accounts for around 35% of customer contacts (compared to approximately 65% for the online channel) and is the fastest-growing channel in financial services.

Remote engagement is expanding. Around thirty percent of clients across all age categories are willing to work remotely with a non-local advisor. In the financial services industry, not only millennials are comfortable with distant engagement. For a more significant segment — let’s call them “millennial-minded” — the concept of engagement expands beyond digital to include remote encounters.

Personalization is an emerging battlefield where organizations that can collect and act on information about client requirements and behaviors will have the upper hand. Another area where people are developing an interest in how organizations can differentiate their offers is simplicity.

Transforming customer experience in wealth management is about turning siloed IT and business teams into champions by unlocking a collaborative and agile way of working, like the engagement Maveric Systems does for top global banks.

Top 3 Digital Technologies for Wealth Management

Wealth managers are redefining their clients’ experiences in the front office by combining new technology and human expertise. The outcomes? Raise efficiencies, enhance customer interaction, and increase revenue production.

In the back office, constant cost pressures and the demand for innovations means solutions must be more integrated, modular, and data-driven. This translates to – transformed operational models, modernized back-office tech, and seamless cloud adoption. The outcome? Flexible, scalable, and cost-effective wealth platforms that bring quicker gains with reduced risk.

To facilitate the mentioned transformation, significant technology investments are needed!

Wealth management using AI, advanced analytics, and ML

As customers today disclose more personal information with their wealth managers, they expect higher levels of customization. Wealth managers must focus on customer goals by eliminating disconnects and providing holistic advice on current investment opportunities. This is done through advanced analytics, AI, and ML (Machine Learning) by translating data into customer insights. Insights are provided via interactive dashboards.

Intelligent automation within wealth management

Be it assisting in M&A, improving compliance, or even digital documentation, intelligent automation is helping wealth management firms. For instance, the RPA (Robotic Process Automation) is one example of expediting the time-consuming process of processing investor data during mergers and acquisitions. Additionally, there are use cases of predictive analytics to deliver higher efficiency and precision.

The blockchain represents the future of wealth management.

Blockchain technology has several potential benefits for the asset management industry, including more transparency, enhanced security, and decreased costs. Wealth management organizations can store unmodifiable copies of reference data on blockchain networks. Additionally, businesses can partition their internal and external blockchain networks to protect confidentiality. As blockchain systems are inaccessible to unauthorized users, security issues can also be reduced. Also, smart contracts can monitor client books and notify clients and their financial advisors of any changes, such as a change in asset allocation so that they can be accounted for.

Conclusion

In sum, the financial services industry, particularly wealth managers, is on the edge of digital upheaval. Digital has the potential to provide considerable cost reductions via robotics and automation, alter operating and strategic models with newer ways to engage the customer, and drive unprecedented market-share gains via digital customer acquisition and service.

About Maveric Systems

Starting in 2000, Maveric Systems is a niche, domain-led Banking Tech specialist partnering with global banks to solve business challenges through emerging technology. 3000+ tech experts use proven frameworks to empower our customers to navigate a rapidly changing environment, enabling sharper definitions of their goals and measures to achieve them.

Across retail, corporate & wealth management, Maveric accelerates digital transformation through native banking domain expertise, a customer-intimacy-led delivery model, and a vibrant leadership supported by a culture of ownership.

With centers of excellence for Data, Digital, Core Banking, and Quality Engineering, Maveric teams work in 15 countries with regional delivery capabilities in Bangalore, Chennai, Dubai, London, Poland, Riyadh, and Singapore.

 

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What is the future of Tech in Wealth Management?

What is the future of Tech in Wealth Management?

Wealth Tech, or the practice of combining wealth and technology to improve personal (and professional) wealth management and investing with digital tools, has grown by leaps and bounds in recent years. As a result, wealth management, in particular, and the financial industry as a whole have been changed in several ways. Platforms that use emergent technologies like AI and ML bring a natural and cost-effective alternative compared to traditional wealth management firms.

Personalization seems to be one of the most important keys to success in the financial advisory business. People have feelings and worries that need to be dealt with, which is something no machine can do successfully.

The Growth of Wealth Tech

Wealthtech isn’t a new thing. Some kinds of technology for managing wealth have been around since 2008. But since then, interest in the industry and the number of people using it have gone through the roof. Wealthtech companies raised $6.6 billion in just the first quarter of 2021. This was done through 162 transactions. The overall funding went from $6.1 billion to $9.3 billion by the year-end.

Even though there is no one way to get to the future, many things will help shape it. Here are some of these current trends.

Blockchain

There are many good things about the use of Blockchain in WealthTech. Blockchain was made to keep transaction data safe, and it can’t be changed or used for fraud. Its skills are beneficial for allocating assets, rebalancing ETFs, and doing other things. This technology could change the wealth management business in a big way.

Cloud Computing

A WealthTech ecosystem is a group of tech start-ups and people who work in the wealth management business. The trend is toward coordinated collaboration. JP Morgan bought Nutmeg and Finantix. The boom signifies a more significant shift in both culture and technology. WealthTech is making investing more accessible and getting positive feedback in a world where millennials are taking over traditional investing.

Digital Brokerage

Social investing is a popular way to use a digital brokerage. It lets you see the investments of people you follow in your trading network, just like how you can follow people on Facebook. Platforms like eToro and Robinhood offer services that make it easy for regular investors and businesses to get stock market information and investment opportunities that would typically only be available to certified investors.

Robo Advisors

The popularity of Wealth Front and Wealth Simple is evidence of a growing trend of Robo-advisors. These automated services empower people to invest by using algorithms and machine learning. More than only investment opportunities, these applications factor in a user’s wealth goals, risk appetite, and life situations to compute accurate advice. Often working as real-life financial advisors, Robo-Advisors, see large-scale adoption worldwide [200 registered companies in the US alone].

Bringing it together,

For the FI’s to consolidate gains and build more on the WealthTech advantage, a few strategic initiatives are a must. The first is to keep improving the customer experience that meets changing needs. Secondly, using data-based recommendations can help build stronger relationships with clients. And finally, investing in cybersecurity to deal with the increasing risk in vulnerable climates.

 

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Wealth Management Focus on AI

Wealth Management Focus on AI

One of the more sober subsets of the financial services sector – the wealth management industry – has been majorly impacted by the AI edge.

From automating routine tasks for increased efficiency and cost savings, wealth investment firms are creating new use cases for AI, ML, and Deep Learning Technologies. Especially post-pandemic, when digital became our primary transaction medium, wealth management companies are hastily speeding up their cloud migration processes and investing in advanced analytics solutions to tailor client services dramatically.

The article elaborates on a few best practices in the AI-powered wealth management industry.

Present-day AI-influenced use cases for wealth managers. 

  1. Holistic AI-enabled investment advice. AI churns out personalized recommendations by synthesizing an investor’s current financial situation with past economic behavior and then aligning that to investment goals.

The subsequent investment recommendations yield the best approaches advisors can discuss with their clients. Much pre-work is saved in investment planning as activities like tax planning, and other input preparation exercises are automated.

With AI-driven algorithms (and platforms), the various tax scenarios, their underlying assumptions, and historical data are processed without human intervention.

  1. AI-driven Asset management. From predicting asset vulnerability to potential market risks to foreseeing market crashes, AI-use cases are on the rise.

An oft-cited example is how AI and ML’s pattern recognition skills are exploited to decide on equities buying and selling. How does that happen? By analyzing thousands of variables – like the company’s financial health, investor’s risk tolerance, and stocks’ historical or seasonal stock performance, specific risks to returns ratios are calculated.

Constant analysis of stock market movements enables recommendations to get sharper over time. With its quantitative and qualitative factors, this is only a start as AI-driven asset management is gaining quick ascendancy in wealth management practices.

  1. AI-led Compliance Management. Today trained AI systems can parse public notices for relevant regulatory information and compile reports. Investment policy statements, investment management agreements (IMAs), and exemptive orders are all examples of official sources that AI applications use to detect changes in the investment climate.

AI and ML systems collect, cleanse, and evaluate various data points to simplify compliance alert mechanisms. This proactively prevents a company’s resource wastage by optimizing its controlling algorithm, translating into direct cost savings.

  1. Robo-advisory. Robo-advisors evaluate a client’s risk tolerance and cash flow, among other criteria, before making investment decisions across stocks, bonds, or other financial assets.

As current projections go, approximately US$16 T in assets are expected to be managed by Robo-advisors by 2025. How does all of this play out? Investors begin by filling out online questionnaires that reveal insights into their investing preferences, after which product suggestions are offered. Next, without any human interaction, fund allocations and account reconciliations are carried out. Finally, the Robo-advisors automate asset swaps and financial investments through an ML system.

The listed technology practices are working because they align with what the new-age customers (Digital Natives and Millennials) want. Below we elaborate on the behavioral and ecosystem shift in the wealth management industry.

AI-infused future is reshaping tomorrow’s wealth management landscape.

  1. Hyper-personalization. Now wealth managers can balance personalization needs with automation. Through ML and CRM data, advisors gain insight into their clients’ wants, requirements, and perspectives at a never-before depth, even more than face-to-face interactions.

Generating a plethora of distinct client personas that extend well beyond the conventional wealth segments allows for the development of fully individualized user experiences. Particularly appealing are the swathes of information tailored to the client’s ESG interests, industry preferences, and financial objectives through a mix of portfolio design and rebalancing strategies.

  1. Next Goal Alignment. Post-pandemic, leading wealth management firms are applying ML strategies to provide Next Best Action suggestions for individual client portfolios. This enables advisers to scale up their ability to offer individualized advice.

Through an elaborate system of notifications and alerts, advisors build layers of iteration until the asset allocation needs are met. After that, using market data and CIO insights, sophisticated narrative reasoning is used to analyze customer behavior and determine the best course of action (or correction) to help each customer achieve their financial objectives.

  1. Simplifying Complex Financial planning. Modern digital planning engines can now perform intricate computations to offer a comprehensive, one-stop solution covering everything from strategy to particular goal support and product recommendations.

Additionally, they provide granular guidance for various circumstances beyond the scope of standard retirement planning. From planning for a child’s college fund donations to charity or a vacation house – all form part of a package that comprehensively meets a client’s future financial vision.

  1. 24/7 monitoring. Significant uptake of AI-driven wealth management solutions is constant, real-time observation. From real-time market movements to news affecting industries – the immediate availability of research, market data, and digital news is a game-changing advantage for investors.

Beyond weekly or monthly updates, clients today monitor their holdings as frequently as they check their inbox or social media for updates. More importantly, advisers today interact with clients and keep tabs on the markets, services, portfolios, and investment strategies – all thanks to the AI proliferation in the asset management sector.

Conclusion

Many financial institutions are exploring using artificial intelligence (AI) to enhance asset management, either as a replacement for human wealth advisers or, more typically, to supplement existing efforts.

Each firm’s AI initiatives are tailored to its particular clientele, investing strategies, and guiding investment principles.

In all of this, the growing role that AI and ML technologies will play in growing the wealth management sector cannot be underestimated.

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The State of Digital Transformation in Wealth Management

The State of Digital Transformation in Wealth Management

In the times ahead, 2022 would be seen as the pivotal year for how wealth management adoption grew and changed irreversibly. Coming out of volatile and ambiguous times, where consumers lacked physical offices, what investment advice would stand the test, there is also increasing evidence of how wealth-tech firms were betting big on digital technologies to drive more efficient wealth advice. Digital onboarding and servicing as processes allowed customers to balance short-term financial stability with longer-term yields. In short, the most significant gain for the wealth management industry is that most players, if not all, have begun taking firm steps towards a digital mindset.

Tectonic shifts, total transformation 

The shifts are apparent. Pivoting to a relationship-based model where advisors offer personalized advice tailored to clients’ goals and life events is possible because of several advances – unified experiences and functionalities like account aggregation, CRM tools, and client portals.

Another critical advantage for wealth managers emerges from scale and omnichannel servicing. In this regard, digitization of account opening, account transitions, and e-signatures, among other workflow tools, has made scale jumps possible, reduced errors, and cut the processing time. In the times of remote working, add to this pot the collaboration tools like Zoom, whose instant appeal among the millennials isn’t going unnoticed.

Seizing the Environmental Social Governmental (ESG) edge

Before every discovery becomes an industry default, there is a window where wealth management firms capitalizing on a trend can achieve quicker customer acquisition. Most analyst firms predict how the current global unrest around sustainability is a cause close to the hearts of millennials and GenY. Support for climate change and other social causes are more than just conversations. The younger investors want their wealth and portfolio managers to be aware of these nuances and offer solutions that have deep links to sustainability.      

Intelligent Automation

A critical fallout of the increased M&A activity in the asset and wealth management (AWM) industry is the increased adoption of RPA (Robotic Process Automation). Merging company and industry data, onboarding new clients, transferring data faster to the new systems, and high sensitivity errors detection and alerts are all coveted features of RPA tools and technologies.

Additionally, along with the various digitization technologies now commonplace (OCR and ICR), there are matters of compliance that automation practices are transforming within AWM.

Cloud Computing

Top wealth-tech players are moving to account management systems for enhanced tracking (and auditing) of documents. With security against data breaches, Cloud applications allow more flexibility and quick scalability through far cheaper subscription options (Software-as-a-service), freeing firms from heavy capital investments in data storage. This cloud-based software market size is expected to grow to $20B before 2026.  

Advanced Analytics and others

There is evidence that 71% of customers willingly share personal information with an increased demand for personalization. Then the onus of creating and maintaining empathetic connections is probably an advisor’s top priority. Wealth managers today use advanced analytics to transform data into insight for customers and channel these insights via interactive dashboards to do this capably. More than Robo-advisory as a notable AI /ML example, AWM firms are feverishly exploring more use cases across lead conversion, unstructured data ingestion, and high-frequency algorithmic trading. Finally, these tools offer unique ways to make optimal investment decisions. Admittedly, integrating these trending technologies is at its inception, and for AI and ML, the years ahead promise to be far more exciting.

Tech Titans in AWM

Across sectors and industries, firms today aspire to be either a technology company, financial companies, or both. Expanding their customers’ wallet share and consolidating their lifetime value are primary motivations for the FAANG companies (FB, Amazon, Apple, Netflix, Google). These digital savvy companies with deep roots in customer analytics are well suited to harness their vast swathes of data and enter wealth management and asset portfolios. Like felt across other businesses, such forays are likely to upheave the industry landscape, something that incumbent players must acknowledge and prepare for.

Emerging tech and the role of Data. 

Real-time settlement models, data privacy protection, risk, financial history, and investments in cryptos are tangible Blockchain use cases in AWM. The leading wealth-tech firms understand the value of executing such high-touch services by embracing emerging technology. As autonomous financial instruments and investment vehicles become popular, the traditional wealth management functions like client advisory and portfolio management will become leaner and be threatened with revenue erosion.

All the mentioned growth levers – Automation, AI, ML, Cloud Computing, and Blockchain – ultimately rely on the robustness of a company’s data infrastructure, including managing data quality, integrity, and governance.

Conclusion

The actual unlocking of the full potential of these as-yet inchoate technologies is happening with each passing day. With the increase in global demands for holistic wealth management, offering niche investments, bespoke advice, or customized protection will also rise. The competitive edge for AWM companies will come from ecosystem collaborations and embracing new technologies that drive the customers’ pricing and value balance.

 

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