Rapid prototyping for accelerated development of Minimum Viable Product for a leading wealth management organization

Four founding principles to drive digital transformation for wealth management organizations

Overview

Over the years, for wealth management financial services, fees have not kept pace with the technological investments made to serve and retain their customers. Additionally, as the number of wealthy investors steadily increase, customer acquisition pressures to maintain market leadership, also rises. Most institutions are seeing a potential benefit in consolidating the wealth management systems and private parts of their wealth business to derive greater economies from scale and technology investment. However, this must be considered in tandem with other emerging trends that impact their businesses.

Shifts in Business Landscape

The substratum of today’s business is shifting by the emergence of:

Asia becoming the center of the new wealth management services
Millennials becoming a critical component among wealthy, and
Gender shift towards women

There is a clear advisory shift for investors because of the demographic changes towards GenX and Millennials. In addition, nearly 50% of customers today, are open to shifting from their existing fund managers, unless they are digitally advanced and cater adequately to their requirements.

Shifts in Advisory Fees

The landscape is also witnessing a shift to performance based fees than event based fees. It poses an additional burden on the already profit squeezed industry to continually monitor the fee in line with the fund performance and explore ways to maximise the ‘Earned Vs accrued fee’, which is fast becoming the go-to performance metric. Moreover, for supporting both advisory and performance-based pricing models, modern technology platforms and solutions are urgently required.

Emergence of Family Office

In vogue for a few years now, the family office gains more traction each passing day. This means that the banks and wealth management institutions should be geared to handle:

Advisory on estate tax and succession planning in addition to investment advisory,
Group conversations as against one-on-ones. Given that the families are geographically distributed, this mandates the need of a secured infrastructure to manage such conversations.
Satisfying the younger customer with digitally advanced platforms and tools since they are the big influencers, if not the decision makers,
Engagement across multiple digital modes – social media, chat, email, voice chat, as well as judicious use of automated and human, collaboration and tool led analysis.

Adoption of Advanced Analytics

Increasingly seen as an area for collaboration with Fintechs around gamification, portfolio benchmarking and visual analytics, advanced analytics have applications across the following areas as well:

Providing market data, analytical tools, and portfolio simulation for the self-directed clients
Using portfolio simulation as an exercise in all advisory dealings
Comparison between advisory and self-directed portfolio simulation
Robo advisory can be used for the High Net Worth (HNW) and mass affluent category, although with caution. When combined with advisory portfolio simulation, it can also be recommended for the Very HNW and Ultra HNW.

Rise of Goal Based Investment Models

Investment models and simulation have become a high value collaboration area with Fintechs. Outlined below are few variants of investment models at play.

Normal investors will continue to set individual goals and track the progress against those goals. At the same time, they will tie up with the advisory in line with the progress including remedial actions.
As compared with the earlier one at the individual investor level, family offices will explore a different version of the goal – at group and family level.
Management based on balance sheet would drive the investment goals and then be prioritized based on an investor’s preference.
Investment models will need to have real-time updates and triggers for call to action than the usual periodic reporting and actions.

Our Focus

By working across several asset classes such as securities, equities/bonds, fixed income, mutual funds and derivatives, our domain led technology specialists enable our customers address their challenges in the wealth management space across the following key areas.

Customer Management

Risk Profiling

Financial Planning

Advisory Services

Order Management

Portfolio Management

Revenue Management

Corporate Actions