Year in review

What would you highlight as the main technology themes for the wealth management sector in 2021?
The wealth management industry has experienced exponential transformation in recent years. 2020 was the year when the global pandemic blew up, disruptive changes emerged, and businesses promptly adapted to survive and maintain their positioning, 2021 was no less eventful. The changes of 2020 were consolidated and a long-term strategy to rebuild emerged. Reducing uncertainty, enhancing trust, reinforcing digital client experience, and seizing secure, sustainable investment opportunities for clients have been the top priorities.

Digitalization was the prominent backdrop for all of this. Accelerated by the pandemic, digital is now seen as a fundamental innovator for business, paving the way for more rapid, technology-driven changes going forward.

As a consequence of digital capability, there has been an increase in customer expectations regarding enhanced customer experience. In 2021 most clients expected superb real-time, hyper-personalized interactions on any channel of their choice. They were no longer comparing banks but instead with their experience with Gucci, Rolex or Emirate Airlines’ first class.

On another note, in 2021, the industry experienced a massive new wave of interest in responsible investment: the ESG trends of previous years became a standard requirement of many private bank and wealth manager clients. The climate action commitments of world leaders at the recent summit in Scotland mean this trend will only grow.

Another trend in 2021 was the unusually high attrition and migration of qualified workforces. In private wealth, it was recognised that, despite advanced intelligent technologies, competitive edge comes from highquality human staff, be it in professional investment management or empathetic customer advice and service. As a result, we see frequent poaching by institutions. The ‘new normal’ operating models (optimizing the balance of office teamwork and remote operations) means the workforce reshuffle is far from over as people seek the optimum work/ life balance.

Why were those themes relevant in 2021 and what progress did wealth managers make in response?
Facing the new normal, where digital is paramount, and clients expect more, wealth management and private banking players invested in redefining their IT and business strategy in 2021. Big players embarked on crucial digital transformation programs. Those who were too small or simply not ready to cope with these unexpected circumstances were either acquired by bigger, digitalfirst firms or changed their business model to outsource or sell nonperforming business parts.

With the Covid-19 pandemic accelerating the need for digitalization, most businesses selected Cloud as the ultimate key to helping them reopen and reinvent. The Cloud offers significant improvements in increased efficiency, flexibility, security, and reliability.

To support the client experience, firms have also made progress in managing and designing their client portal. They have added new features to make the portal more interactive, offering services such as secure messaging, money transfer and online payments, access via mobile app, etc.

In terms of client acquisition, firms have moved to beef up digital onboarding to provide an integrated experience that is frictionless and fully compliant.

Year in view

What would you highlight as the main technology themes for the wealth management sector in 2022?
2022 starts with curiosity about what markets will bring, what clients will demand, and where the relentless progress of technology can take us next.

A hybrid model for advising clients sounds like the best opportunity when looking at the client relationship. On one hand, the technology-only route goes against client desire for a personal relationship. But on the other hand, wealth managers also need to make sure their virtual client experience is top-notch, finding ways to differentiate themselves through online customer engagement and branding excellence.

This is all the more important given the entrance of younger investors to the market and their high expectations around digital service.

But digital does come with a downside, notably a security risk. In 2022, investing in FinTech cybersecurity - building a more resilient, forward-thinking security strategy, as the number of data possessed and prone to attacks increase, is paramount.

Compliance in the form of RegTech is also receiving attention. Here, the combination of technology and regulation improves data protection and cybersecurity. The Cloud also helps with hybrid computing and authentication beefing up security.

Following the pandemic, primarily due to the current uncertain economic environment, clients are increasingly interested in opportunities that significantly reduce costs, increase scalability and agility and enable technology. As a result, they are highly considering outsourcing in their decision-making processes for 2022.

Last but not least, ESG is still at the forefront of client demands and investing decisions accordingly.

Why have you highlighted those themes and what do they mean for the wealth management sector?
In 2022 talking about ‘going back to normal’ no longer works. Tomorrow’s strategy will have to accept that there will be a ‘never normal’ scenario where having a digital DNA empowered by technology will be pivotal. Trends will be progressively driven by:

• Increased competition; a highly-personalized client digital experience will become the battleground, competition will become intense. The winners will be those making the most of human capital and technology to deliver a customer experience that is holistically tailored for each client’s demands and expectations.

• Perpetually changing client expectations; frictionless, personal, digital, transparent: these are the key to forging customer loyalty and acquiring new clients.

• Maturity of technology; organisations feel the urge to digitally transform their business and operations and improve or further advance their digital transformation and increase their efficiency.

How should a wealth management firm tackle these themes and what targets should they set?
Client-centricity
Firms need to move towards a client lifecycle management system with a systematic approach that puts clients at the center of the entire organization. Personalization will be taken to the next level, with a deep understanding of all client journeys.

Adjust traditional models and communications to address the next generation of wealth
The rise of a digital native, eco-conscious generation requires tech-based, innovative companies and services offering advanced digital capabilities, combined with significant attention to sustainability of products, services, and policies. This means traditional models and communications must be adjusted.

One way to do so is meeting Generation Z where they are, asking new questions in a new way. Diagnosing how they consume content digitally could really make the difference to whether they engage or not.

Regarding brand client experience, the scope is broader compared to the past, and actions can be performed on new media. Websites hosting valuable insights about your company, blogs and other platforms can create more opportunities for keeping Generation Z interested. It needs to be matched with visual appeal and be easy to use.

Hybrid, omnichannel customer engagement
Having a digital DNA in client engagement is one thing, but it cannot survive long without personal interaction. The truth is that when personal finances and investments are concerned, adopting an omnichannel/hybrid model might be the key to the best of both worlds. Finding the right balance between robo and human will be pivotal to performance in 2022.

Market status

Among those previously highlighted, which focus areas would you select as the three most important challenges in the industry and what would you reckon as their main drivers?
Outsourcing, ESG and cybersecurity can be emphasized as the highest priorities for our industry in 2022. This is primarily due to changing customer demands; Millennials and Generation Z prefer technology-driven, transparent, ESG compliant investment platforms and strategies.

Responsible investing is climbing the rankings of the wealth management agenda and will become a top prerogative in 2022. Customer expectations are evolving at a faster pace compared to any previous year. As far as ESG is concerned, clients are already demanding more concrete action and no longer accepting greenwashing. Wealth managers need to support this with sustainable, accountable, data-backed investment choices.

Outsourcing practices are also dynamically reshaping the industry. Wealth companies are currently focusing their people’s efforts on growth areas: client acquisition and client satisfaction. Innovative solutions that support this process, integrated into the broader ecosystem, powered by hyper-personalization, are in demand. Among outsourcing main drivers, we reckon as the most relevant:

• Cost reduction; outsourcing enables firms to control and reduce costs, which is fundamental, especially in an uncertain economic environment. It also enhances efficiency and flexibility.
• Cloud-first mindset and toolset is recognized as one of the primary steps in the outsourcing journey, particularly with Covid-19 shifting operations of all sorts online.
• More investment in supplier management technology capabilities.

Cyber-crime is also an inherent issue. With more technology comes more data. That is an issue due to the sensitive and personal nature of the data.

A comprehensive response includes tightening regulatory measures, internal company policies, and enhanced, intelligent technology solutions for access control, identity verification, and secure communications.

What are the main building blocks for any wealth management firm in making the most of the technologies available to them?
Firms will be required to implement a future-proof digital transformation program. The aim is to deliver cutting-edge digital capabilities, rethink customers’ digital engagement in light of a profound understanding of customer behavior and expectations, launch apps for investors, redesign operations taking into deep consideration new economic realities and societal shifts. Practically speaking, firms will be looking at end-toend customer experience optimization, operational flexibility, and innovation. This approach will lead to business model transformations and new forms of digital processes.

Focus & solutions

Considering the themes identified, what is your role and what does your business offer to support wealth management firms?
Objectway’s strategy focuses on providing financial services institutions with cutting-edge technology that meets the needs of both end-customers and the business itself, while enabling platform consolidation on the cloud and cost optimization. We are powered by 30 years of business expertise in delivering wealth and asset management technology and services.

Our front-to-back solutions unleash the potential of wealth, asset managers, and private bankers to optimize their business, such as multi-channel customer engagement, front-office productivity, stronger investment performance, suitable advice, efficient back-office automation, pro-active client reporting, and management analytics.

Our research and development are also focused on embedding more and more AI-driven engines to deliver highly personalized, seamless journeys across channels and transform customer insights into messages to address their unique needs.

Moreover, thanks to our recent acquisition, we can now offer an open, modular, and digital end-to-end banking suite that blends banking capabilities with relevant products and services beyond banking. It gives intelligent and personalized experiences through a consistent user journey to increase digital penetration and maximize client engagement while improving efficiency and bankers’ capacity.

The scalable and Cloud-ready solutions are available on-premise, SaaS, or BPaaS (in 2019, we also certified the solution for the Amazon Cloud with live clients in Europe). Leveraging a component-based open APIs architecture to easily integrate with third-party systems and within the IT infrastructure of clients.

How will your firm further develop its offering to support the evolving needs of the wealth management sector?
To focus our energy and resources, we have prioritized several key areas this year.

First, core banking systems, affirming and expanding the strong capability resulting from merging Die Software and the OBS solution. We are taking it to new markets - across Europe and beyond, and to new industry segments - particularly the growing multitude of smaller and challenger institutions.

We intend to package a platform-type SaaS solution that would include our established Wealth Management offerings on a white-label basis – delivered directly to client firms, or through partnerships with established platforms.

We are in the process of further enriching our Wealth and Asset Management Suite with functionalities and features responding to market demand. An example is our commitment to sustainable and impact investment, where we are adding and enhancing ESG and related features in portfolio management and aspects of advanced risk management. We also pay close attention to regulatory requirements and client interest in respective solutions - like the MiFID-related SFDR regulation, which EU institutions will have to meet this year, and for which we can offer a solution.

Clients are showing continued interest in improving their digital client engagement and lifecycle management. The success of dedicated Objectway solutions in the area gives us the confidence to continue expanding our presence in this product segment and further innovate and enrich the associated functionalities and offerings. Customer-centric business is at the heart of our own strategic DNA, and we are keen to help clients in the same direction. Whatever challenges 2022 may bring, Objectway will remain agile, dynamic, and responsive to market changes and client needs. For this, we continue our relentless capability building with a focus on our talent pool, innovation capacity, and strategic growth.

This article is from The Wealth Mosaic's WealthTech 2022 Report. Access the full report here.