There is increasing pressure on Wealth Management firms to adopt digital tools. As the evolution of fintech continues, the potential competition they pose has become increasingly apparent. However, collaboration with fintech can also be a great opportunity for firms to improve their customer experience through digital technologies.
The Whitehouse Framework for fintech highlights the importance of collaboration between financial institutions and Fintech, stating “for fintech to achieve its full potential…stakeholders must collaborate” and the Wealth Management industry is no exception. However, there has been a slow adoption of Fintech in the industry and according to a PwC global survey, more than a fifth of wealth management businesses believe that Fintech have the potential to erode market share.
We are living in a world that is becoming increasingly digital. Online technology has already become an essential part of banking and investments and the world’s wealthy have an expectation of online and digital functionality. Over half of High Net Worth Individuals (HNWIs) believe that it is important for their financial advisor or wealth manager to have a strong digital offering. Wealth Management needs to adapt to this and provide the technology that is increasingly demanded by their clients.
The value of the human touch in Wealth Management should not be dismissed though. Rapport with clients is cited as the second-most valued aspect of a Wealth Management service after investment performance. However, clients are increasingly aware of what digital and financial technology can do in the investment space and it is key that Wealth Management firms have a business strategy that genuinely embeds technology into their value proposition to stay relevant.
Fintech innovators can provide the world’s wealthy with slick and highly personalised ways to manage and coordinate their assets, and leverage their real-time personal data continuously to make better financial decisions. However, these market-ready solutions do not need to pose a threat to Wealth Management, the key is collaboration. There is a great opportunity for strategic partnership that allows Wealth Management firms to provide the technological solutions required at the speed the market now expects.
Firms that successfully use technology throughout their business to fundamentally change and improve the service they provide will be the industry winners. Working with fintech companies that can facilitate this change will allow firms to differentiate themselves and appeal to HNWIs.
If Wealth Management wishes to meet the expectations of its HNW clients by offering digital technologies, there needs to be a shift away from viewing fintech as a threat and an embracing of the opportunity for collaboration to move the industry forward.
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