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On the evening of Monday, March 23rd, in response to COVID-19, UK Prime Minister Boris Johnson announced a nationwide lockdown which would result in far-reaching business challenges for all. In light of restrictions on social interactions, two particular questions loomed large for UK wealth managers:
- How do we replicate the way we work with clients?
- How do we replicate the way we work together in our office?
After all, the UK wealth management sector places a great deal of importance on trusted relationships and physical touchpoints with clients. Unfortunately, it also happens to be one of the financial services sectors which, let’s be honest, has been very slow to embrace digital transformation. The challenge was – and still is – a big one!
To meet this challenge, UK wealth managers were compelled to move with unprecedented speed to adapt their processes and embrace digital collaboration tools, many of which they already had access to, but had been using in a limited capacity. Video conferencing, for example, saw the greatest surge in use since it enabled collaboration with both clients and colleagues. Digital identity verification also saw an increase in demand, as did digital signature, digital document sharing, and digital document editing applications. However, the extent to which wealth managers could embrace some of these technologies was going to require some further guidance from the Financial Conduct Authority (FCA).
On March 31st, after having received hundreds of requests for adaptations to their regulatory approach, the Interim Chief Executive of the FCA Michael Woolard sent a “Dear CEO letter” to firms providing services to retail investors. In this letter, he communicated supervisory flexibility over best execution until the end of June and supervisory flexibility over 10% depreciation notifications until the end of September, much to the relief of UK wealth managers, few of whom had relished the experience of stuffing countless envelopes at home! The letter also highlighted the flexibility which firms had within FCA rules for digital client identify verification while adhering to the 2017 Money Laundering Regulations. This was an important affirmation for many firms, who up until this point had neglected to really explore digital identity verification.
Fast forward to today, nearly three months later, and it’s clear that UK wealth managers are embracing every digital tool at their disposal, whether it’s Zoom meetings with clients or the implementation of a digital ID verification solution. In this way, the question of ‘How do we replicate the way we work with clients?’ is one which has actually been relatively easy to answer. But client engagement is just the tip of the iceberg… What of internal operations?
In speaking with our UK customers on a daily basis, I’ve been fascinated to learn how they have adapted to working remotely, thereby addressing the second question ‘How do we replicate the way we work together in our office?’.
While most wealth managers can now collaborate effectively with their clients digitally, the same cannot be said of internal collaboration. Sure, they have Zoom, MS Teams, email, and shared folders, but what working remotely has highlighted is the disconnect between colleagues, departments, and internal systems when it comes to the dissemination of client data, the majority of which is still held on paper.
That being said, firms are doing an admirable job of filling the gaps by scanning documents and mapping their processes across SharePoint folders so that they can track and manage the information. Interestingly, this kind of quick fix has surprised some COOs who are reporting efficiency improvements at a time when new account openings remain high despite COVID-19. It has really got them thinking about what they can achieve in the future by reducing paper from their business and connecting their disconnected digital tools and systems as part of end-to-end digital processes.
Stephen Manly touches on what UK wealth managers should prioritize to enhance client value.
So, what does the future of digital collaboration in wealth management look like?
Well, I think it’s fair to say that the resistance to change traditionally demonstrated by the UK wealth management industry regarding digital transformation has largely dissipated. Many UK wealth managers have now had their first taste of digital collaboration, and have seen first hand how it can not only drive efficiency but also improve compliance procedures and client experience. They have become very comfortable very quickly with their new tools and ways of working, and they are looking for some more. For the majority, what started as a measure to mitigate circumstances will become the ‘new normal’.
When it comes to UK wealth managers adopting digital means of collaboration, there is no turning back!