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Five use cases for wealth management as a service

Five use cases for wealth management as a service

The promise to provide consumers with the financial services they need when they need them, over the right channel, and tailored to their context – has led technology to be the favored innovation lever for the financial sector. From wealth management, commercial, investment, and consumer banking, stocks, loans & finance, and foreign exchange, the most significant use cases have been seen in high-frequency trading, risk management, creditworthiness, commodity trading, and increased personalization.

Post-Co-vid, wealth managers are tackling some new and some very complex challenges. Staying relevant to the younger investors

  • ­Leveraging the latest Tech to stay relevant 24.7
  • ­Combating disintermediating posed by Robo-advisory services
  • ­Pressures to decrease fees and increase revenues.

The mentioned market landscape features increase the dependence on business processes and cost optimization, find ways to enhance investor experiences, reduce cycle times and errors, and finally, better utilization of advisor times.

BaaS and its merits

BaaS being API-based is not the same as white-labeling. Also called embedded banking, BaaS is when consumers use banking services through distribution channels that are not a bank or a financial services company. For instance, when you use the wallet feature of the rideshare companies or convert your purchase into EMI’s at the supermarket aisle – those are examples of BaaS. The distinct advantages are that the financial component becomes flexible, quicker, and technology-friendly at an inexpensive differential.

When applying BaaS to wealth management, the possibilities of conducting banking in more non-banking channels make for exciting propositions.

  1. Self-Service in Wealth Management

 Banks are experimenting with a “go-to-wealth” manager by revamping the direct-to-consumer strategy. Implementing a single offering for direct investments and financial planning, the services providers are developing both the digital channels as they take off the legacy platforms. To fully service affluent clients, re-engineer the execution of processes, and improve product capabilities – are all effective ways to significantly reduce the cost-to-income ratio.

  1. Developing Multiple Value-adding Tools. 

From enabling clients to see wealth managers’ virtual availabilities to tools that resolve queries and next-gen communication platforms, including screen sharing, are upping the boundaries of wealth-management practices that have long relied on face-to-face advisory services.

Several ‘what-if’ analyses tools are expanding the client’s knowledge across multiple investment options, resulting in higher conversion.

  1. Next-best-action in Wealth Management 

The growth in the number of sales prospects, touchpoints, and communication channels makes it impossible to manually calculate the probabilities that will bring in the best engagement on an individual basis. For precise targeting of the hard-to-let go offers, modern ML algorithms continually discover customer buyer journey patterns to effectively motivate clients to buy, thereby enhancing marketing and sales ROI.

  1. Financial Markets and Investment Analysis. 

Choosing to invest in a stock, company or commodity relies on Data sciences today. The increased pressures to automate and make the process more and more foolproof is a technology end game hotly pursued by the best in the business. Consider the practices of algorithmic trading that are used to choose which are the favored stocks. Advanced mathematical formulas guide bankers to select the best stocks and visualize a long-term risk-optimized management strategy for these stocks. Reliable scientific results come when data fed to the ML algorithms grow both volume and richness.

  1. Advanced Analytics in wealth management 

 Advanced analytics is used extensively in wealth management, from lead generation and pitching to onboarding and transaction execution, reporting and reviews, servicing query resolution, and communication. Wealth managers use the digitized operating model to support advisory and non-advisory activities and service the changing investment preferences. Building modular data and IT architectures enables intelligent decision-making and personalization at scale. This is not only about meeting regulatory obligations but also boosting the productivity of investment advisors.

Conclusion.

A wealth management firm comes together when people, processes, and technology work in a mutually enhancing manner that offers the best client experience and makes for a strong case of efficiencies by automating routine tasks, thereby freeing up the advisors to respond with higher agility to the client needs. After all, the best possible resource they bring to their relationship is trust, and growing it, requires ample quality time.

 

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2022 Trends in Wealth Management Driving the Industry’s Future

2022 Trends in Wealth Management Driving the Industry’s Future

In 2022, wealth management firms consisting of commercial, and retail banks, universal banks, fund management companies, online trading platforms, private banks, brokerage firms, and family offices, are in a reinventing mode. Demographic shifts (before 2030, millennials will be five times wealthier than today) and increased digitalization (automated workflows, improving hyper-personalized products, the impact of data analytics in client acquisition, servicing, and retention) drives profound changes in an industry that is in a hurry to shed its ‘conservative cloak.’

Here are 2022’s top seven trends for the wealth management industry 

Soul Searching and Money on their Minds

Pandemic brought in waves of reflection. As people began rethinking their relationships with work, purpose, and money, COVID variants brought stock market uncertainty. Low-interest-rate environment prevailed, cash usage fell, inflation rose, remote working changed the nature of wealth advisory services, fund managers favored diversification approaches, and cloud computing (amongst other technologies) gathered steam in its industry journey.

Every dark cloud brings its silver lining.

In the last 24-months, the spurt in financial planning needs – short and long term – shows enhanced customer motivations to envision, plan and start on their life goals. So, what’s needed? Hordes of informed customers today look for competent (and digitally equipped) wealth managers to help them across the spectrum – from tax advisory to estate planning and will creation and everything in between. 

Blockchain and crypto complexity is no longer ignorable. 

While blockchain impacts across retail banking and asset management get discussed, it is a matter of time when wealth management use cases see the applications of real-time settlement models, single point of truth, automated investment vehicles, and smart contracts. The distributed ledger technology promises to severely disrupt the industry – from how financial transactions are executed (threatening transaction fees), crashing costs of KYC and investment profile transactions, and more importantly, when cryptos are offered as a mainstream investment asset choice. A few banks (UBS) are experimenting with distributed ledger technology-based trade finance systems.

Baby Boomers pass the baton to Millennials. 

In the generational relay race, as millennials prepare to run the next leg, the technology functions as the baton. The wealth management industry, to be fair, has been in a preparation mode for some time – advisors’ compensation structure has moved from a compensation-based model to goal-based frameworks. The new generation advisors lean towards data and analytics to juggle multiple investing strategies with often contradictory client asks. The sweet spot is to stack the highest returns via a hyper-personalized portfolio aligned to unique life goals and lifestyles.

And what are the technology systems driving the goal?

From cloud computing platforms for data and richer insights to embracing open API architecture for 360-degree customer views to Robot-based advisory services, predicting life events via AI/ML detection systems, and product propensity engines for affinity offers.

Old-world customer experience still wins. 

As more clients adapted to virtual meetings overnight, what surfaced as a winning practice was something the industry knew as its single biggest differentiator: trust in a one-to-one personal environment. The shift is evident. More than seeing a product as a single source of value, customers now seek value in the experience of how a product or service is delivered. Static, episodic, and manual planning processes have to go. Instead, the millennials and device-savvy customers ask for more dynamic, ongoing, and digital choices. Moreover, financial security has consistently ranked high on a successful wealth advisor’s list, but the pandemic emphasizes that one size will not fit all and focuses on combining risk planning with growth.

Developing an ecosystem focus for wealth management hypergrowth.

Hong Kong’s Total assets under management (AUM) rose 21% to $4.5 Trillion in 2020, while private banking and wealth management reported an increase of 25% to $11.3 trillion. In a stiff competition for global wallet share, the island region continually punches above its weight because of multiple factors. The transparent regulatory framework, technology-embracing climate (including robot-advisors and high VR usage in the industry), a professional talent pool, and the broad availability of new-age investment offerings (art and wine, for instance).

Go Green, beyond the currency. 

While financial returns will continue to occupy full attention, a growing segment of investors expects their wealth managers to know more about the current ESG issues and practices. ESG, or Environmental, Social, and Governance, is today’s direct result of rising consumer consciousness so that planet is seen as equal to profits, meaning equal to money and growth as equal to Green. In product design, fund allocation, and performance parameters, significant efforts in the wealth management industry show a considerable ESG influence. 

Final words. 

In a world that fights one variant after another, the power to do good and the ability to be good comes from the belief that customers are secure in their current material spheres and protected in their future goals. Wealth management has a direct and pivotal role in cementing that belief.

Never has there been a time in history when the industry has had a more significant power to change the future.

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