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WealthTech Views: Looking into 2020 with Dorsum

Interview with Bálint Fischer, Head of Innovation, Dorsum

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20 years of experience in the field of investment software

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Wealth Management Platform

Wealth Management Platform is a front-to-mid advisor platform. It provides a truly 360° client wealth overview, financial goal planning and portfolio management capabilities. It boasts a comprehensive system of warnings, RM and network level KPIs. It offers full MiFID II compliance; risk profiling, appropriateness and target market check as well...

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by Dorsum Co. Ltd.
| 23/01/2020 18:00:00

Wealth management firms are starting to realize that they need to lay greater emphasis on the investors of the new generation, according to Bálint Fischer, Head of Innovation at Dorsum. They need forward-thinking and more relevant approach to investing. Environmental, Social and Governance (ESG) and gamification- making investing fun -are just two things to think about.

Challenges: What do you see as the main technology and technology-related challenges for the wealth management sector through 2020?
Decreasing the innovation gap: The growing gap between profitability and market volume shows that wealth managers are failing more and more to serve clients successfully with their existing business models – either from a revenue or cost side, or, even worse, from both. The urgency to develop new business models is increasing and forcing wealth managers to intensify transformational innovation efforts.

Establishing a strong relationship towards clients in the digital space: With digital technologies around, clients are no longer satisfied with only traditional offline in-person advisory, and instead also require personalized, experience-based client management. Wealth managers need to reinvent their business model, investing in new advisory models to enhance the value of the client experience and to ease the daily interactions between them and the clients.

Providing an easy-to-understand digital interface to clients: The digital transformation of wealth management is happening right now and in order to gain an advantage in this highly competitive landscape it is crucial to provide a simple investment experience to clients, present banking products in a new and engaging way and make investing accessible to everyone.

Generation shift: In the next 10 to 15 years, a significant amount of wealth will pass from the Baby Boomer generation to the X and Y (Millennials) generations. This may, among other things, change the service model expected of investment service providers. As a result, the multigenerational wealth transfer sets the real challenge to adapt to the digital expectations of these generations, which could bring significant business benefits in the coming years.

Eliminating wealth managers’ inefficiency with digital tools: Incorporating automatization in the wealth management industry, as administrative burdens still weigh down financial advisors, is inevitable while chasing productivity. The time to prepare for a client meeting, the after-meeting administration and the portfolio reporting consumes a rather large percentage of financial advisors’ time. This could be significantly reduced by data aggregation and automated document creation and thus provide more time for client facing activities where true value is created.

Opportunities: What do you see as the main technology and technology-related opportunities for the wealth management sector through 2020?
Role of data analytics and data science: Wealth managers have been providing personalized advice for a long time, but today’s world demands more than just a tailored portfolio constructed by a financial advisor. Wealth management companies could provide product recommendations based on previously viewed or purchased products and on products purchased by other users with similar investment habits.

Enhancing the mass affluent self-service advisory approach: There is an increasing demand for independently executable transactions (account opening, buy and sell orders, etc.) and an overview of related information in a single interface. Wealth managers can provide solutions where clients have access to all their investment options and portfolio information digitally and can assemble their own portfolio based on product recommendations matching their profile, which can be sent to approval and is supervised by the financial advisor.

Importance of ESG: Environmental, Social and Governance (ESG) investing is increasingly becoming a phenomenon on the world’s capital markets. By developing a long-term strategy encompassing ESG product recommendations there is a chance to create a brand loyalty and reputation that attracts customers who would like to align their investments with their values.

Shifting towards cloud-based solutions: A SaaS business model over the traditional on-premise implementation approach should not be omitted by financial institutions who are heavily reliant on cutting edge, cost effective and secure information technology solutions. An easily scalable ecosystem offers all the flexibility that client organizations need in terms of functions used, number of users & end clients served, runtime, etc. The lead times between subscribing to a new module and being granted the access rights can be virtually zero, making it a truly seamless experience for client organizations as a whole and end users alike.

Utilizing on gamification: As a new generation of investors enter the market, making investment both fun and cool could revolutionize wealth management and set the scene for disruption. Wealth managers can use gamification to increase customer engagement, satisfaction and loyalty, while motivating their clients to make financially responsible decisions. Clients able to earn achievements could exchange them for rewards: a month of free management fee or a premium deposit for example.

Increasing transparency: The performance of advisors can be continuously tracked based on KPIs. A multi-dimensional real-time, quantitative feedback system opens up many new opportunities for the evaluation of advisors.

Market focus: When considering your wealth management clients and prospects, where are they currently focusing their technology investments and resources: clients, advisers/staff or their business infrastructure?
Wealth management firms are starting to realize that they need to lay greater emphasis on the investors of the new generation and appeal to them with a forward-thinking approach to investing.

Existing legacy systems and complex processes are causing great difficulties and long lead times for investment service providers, as a result more and more businesses organize their foundations around new, modular digital solutions, systems and processes.

Searching for digital solutions that can maximize financial advisors’ efficiency. An increasing amount of financial institutions introduce digital advisory tools supporting the work of financial advisors with up-to-date, system-aggregated data and customer-level KPIs.

Solving arising compliance risks due to regulatory changes. To meet MiFID2 requirements workflows can be created in the digital advisory tools for pre-defined client meeting types to ensure that the consulting process is fully compliant with all rules and regulations.

Clients would like to reach all relevant information about their portfolios anywhere and anytime transparently, even on their phone, through an easy-to-understand application.

Excite: When you look at the technology capabilities and resources now available to the wealth management sector, as a solution provider, what excites you most in 2020?
Technology is now available for incumbents to provide cryptocurrency account management to their clients. This does not only enable traditional banks and wealth managers to provide a new level of asset diversification to their clients, but with a strongly limited number of providers making use of these possibilities, can be a real difference maker.

Big Data has facilitated a significant change in the way we live our lives but has not yet made a notable entry into wealth management. We are really excited to work on a project aiming to profile users based on their everyday interactions with other digital services – which could reflect their risk appetite and provide personalized product recommendations.

Your support: Finally, as a solution provider to the wealth management sector, what will you be doing in 2020 to help your clients and prospects meet their main technology and technology-related business needs?
We are designing a Communication HUB, that connects advisors and their clients through notification sending and real-time chat. The secure communication module, which is integrated into the advisor’s Wealth Management Platform and the client’s My Wealth app, features exciting functions such as real-time document signing by clients and an educational chatbot.

We are also working on Big Data driven investment profiling engine to generate product recommendations and more accurate profiling. Our end-to-end self-service advisory module to serve the swiftly growing need of the mass affluent segment to handle their own investments should see significant input and our back-office innovation team is tirelessly working on revolutionizing back office systems, currently developing 3 products.

We believe it is time for incumbent banks to take the first step into the crypto world, working in long term strategic partnerships on crypto account management tools for financial institutions.

And finally, this year, as always, we put an emphasis on improving our existing advisory and client facing tools.