Transforming wealth management: Trends from the Banking Transformation Summit

Advances in cloud computing, data analytics, and artificial intelligence (AI) are driving significant transformation in wealth management; reshaping how firms manage and serve their clients. Such is the scale and potential of these advances; wealth management firms face an abundance of both challenges and opportunities.

This blog explores some of the most pressing challenges firms must face and how they can overcome them to leverage this technological innovation effectively. It’s a journey that promises to enhance customer experience, operational efficiency, and competitive advantage, offering a bright future for wealth management.

Balancing existing clients and new client bases

Wealth management firms face the challenge of catering to existing clients who prefer a more traditional approach and a new breed of younger, digitally savvy clients.

Whereas more established clients value a human-facing service, younger generations expect and indeed favour seamless digital interactions. To effectively engage this younger demographic, firms must be able to complement professional validation with diverse communication channels beyond email.

Firms must remove barriers to attract and retain these clients by creating accessible, digital-first experiences, offering incentives, and increasing marketing budgets to encourage interest.

Personalisation and mass customisation

Rather than simply a feature, personalisation is the essence of effective wealth management. Whether delivered on a per-client basis or by using a more segmented approach, it fulfils the essential role of making each client feel uniquely important.

Next-generation AI enables this mass customisation, allowing firms to provide tailored advice at scale and reinforcing the value of each client’s individuality. For example, wealth managers can offer timely, relevant advice to enhance client engagement and satisfaction by leveraging data from various life events and triggers. However, handling customer data sensitively and tailoring services explicitly for client benefit is critical to the success of this approach.

New digital products and AI integration

Investment platforms and open banking tools, like Moneyhub and Moneyinfo, simplify financial management by allowing clients to aggregate data in one place. Meanwhile, AI provides opportunities to enhance these platforms by automating manual tasks, such as capturing meeting notes and client conversations and ensuring regulatory compliance.

AI’s role in wealth management goes beyond improving efficiency and accuracy – it also plays a crucial role in protecting clients. For example, AI can flag if a client appears to misunderstand a piece of advice that would not be picked up from word transcripts alone, ensuring that clients are well-informed and protected.

Speed, accessibility, and presentation

Today’s clients expect quick, online access to their financial information, slick data presentation, and the option to speak to a professional when needed. Speed and accessibility across hybrid channels are paramount.

Wealth managers must invest in intuitive, visually appealing interfaces that make complex information easy to understand. Customer expectations on the ability to interact with services seamlessly are now generalised across financial services, set by advances such as Open Banking. They require robust authentication and providing immediate access to professional advice when necessary.

Regulatory demands and data quality

An increasingly demanding regulatory ecosystem requires wealth managers to enhance their data completeness, quality, and accuracy. The FCA’s 2023 Dear CEO’ letter stressed the importance of tackling financial crime and putting customer needs first by meeting high standards underpinned with strong data governance.

If wealth management firms are to meet these standards and lay the foundation for compliant product innovation, investment in technology is needed. For example, AI systems can assist in identifying regulatory triggers, such as testing customer understanding and vulnerabilities to ensure compliance. Nonetheless, firms must remember their duty to the customer and ensure AI ethical policies are established from the outset.

Customer journey and operational efficiency

Building customer journey-based services while delivering operational efficiencies to provide a holistic client experience involves a coordinated approach across financial services and insurance. This approach is crucial for ensuring client retention and satisfaction. Data analytics can then optimise internal services, such as risk and compliance, further reducing costs and improving service delivery.

Firms need to start with a well-defined customer journey and build out services across all relevant areas. Taking this approach helps remove barriers to entry for the younger demographic, to prepare for the ‘great wealth transfer’ where trillions are anticipated to be handed down to future generations in the coming years.

In Summary

Integrating cloud, data, and AI is revolutionising the wealth management industry. Firms embracing these technologies can enhance personalisation, improve operational efficiency, meet regulatory demands, and engage and protect a new generation of clients. Those who delay moves towards modernisation risk losing out to the competition.

Article written by Orla Parry, Head of Private Sector Business Development at BJSS

BJSS is a leading partner to the financial services industry. Over the past 30 years, we’ve helped multiple wealth and asset managers to innovate at scale.

Talk to us about your transformation goals and find out how we can help you leverage cutting-edge technology and stay ahead in a wealth management industry undergoing unprecedented evolution.

This is not a sponsored article and no commercial agreement exists between BJSS and FinTech Scotland.