The open wealth ecosystem is a challenge and an evolution in the making. First of all, it is important to note that ecosystems are driven by customer requirements and that wealthy clients’ needs go beyond what wealth managers offer. With the next generation and societal change, new requirements will be added. Private banks cannot cope with these dynamics.

The wealth sector is following others in this respect - it’s always been a slow mover when it comes to technology adoption and is inherently cautious.

“This is something of a cultural revolution,” says Urs Bolt, an independent WealthTech advisor. “Wealth managers are used to, and like, doing things for themselves. They exist in a culture of privacy and excellence and exclusivity. They are unused to reaching out to third parties and even more unused to actually collaborating with them.”

The challenge for wealth managers is now to think outside the box and to think about the best way to collaborate within customer-centric ecosystems.

“If we look at China and SE Asia, we see already that ecosystems are quickly becoming a new reality. These countries have advantages because they don’t have legacy systems like in the developed world and on the other hand they have to serve masses of people which cannot be serviced on the platforms from the last century. DBS Bank in Singapore is one very good case in point. It is a universal bank that also acts as a platform for related products and services.”

He explains that DBS has begun to restructure its business around thirdparty ecosystems, built by others. This alone is already a lesson for others. They gave up the ambition to be the centre of the universe. DBS is a great showcase of a digital and cultural transformation. “It now sees itself as an ecosystem orchestrator and a facilitating partner. In doing this it has found new ways to remain relevant to their existing customer base and attract new business at the same time,” he says.

Bolt says that banks have the advantage of an existing client base – to retain that they need to gain the platform capability that can serve the smallest and the largest of clients.

WealthTech firms are trying to attack the high potential market from two sides. One tactic used is top-down, i.e. offering digital solutions to UHNWIclients including single and multifamily offices. This leads to further pressure on bank margins.

The second tactic is by offering robo-advisory services for the underserved mass affluent customer base which is being increasingly neglected by wealth managers. In addition to the WealthTech startups, we see that BigTechs are also looking to get into financial services, even though not yet in wealth advisory. But this is just a matter of time rather than if. So now is the time for banks to act.

These new movers mean that formerly exclusive services will become subject to platformification and digitalized-accordingly they will come down the value chain and become more accessible. This will serve as an attraction to those still in the wealth accumulation phase and foster loyalty.

“Banks will also need to collaborate with each other directly or via platform services to make for a meaningful ecosystem. This again requires a change in mindset where banks and platforms will need to accept coopetition and see each other as friends not foes,” he adds.

This is clearly going to be culturally hard but the risk is missing out on capturing or retaining the current and next generation of wealth holders.

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This article originally appeared in The Wealth Mosaic's 2020 Swiss Wealth Technology Landscape Report. Click here to access and download this report:
https://docsend.com/view/2b56ksz