With the right know-how, accessing high quality but affordable engineering capability has never been easier, according to Sharmil Patwa and David Noyce from Opus Una. If the right governance and management processes are in place, small, agile firms can create competitive advantage by building high traction digital businesses at speed.
Challenges: What do you see as the main technology and technology-related challenges for the wealth management sector through 2020?
In 2020, a credible digital capability should be a firmly established priority for all players in the wealth management ecosystem. For larger firms, there will be challenges in setting strategy, allocating budget and achieving ‘true’ commitment to digital business models. Small, scaling firms often have a clearer focus on digital – and are in fact typically digital first players.
Leadership teams need to navigate an increasingly complex technology resourcing landscape and limited affordable onshore engineering options versus an overwhelming but unfamiliar array of offshore capabilities. The experience and management bandwidth required to make a success of these partnerships can result in expensive opportunity costs. Speed to market with a quality minimum viable product is also increasingly essential for those firms looking for the critical next round of funding.
The ongoing need to comply with regulatory requirements and manage associated operational risk has fuelled the expansion in regulatory technology solution offerings which offer a quick path to compliance. Typically niche products by design, the challenge for the wealth organisation is to determine how best to integrate RegTech solutions into the core business and data architecture of the firm (and in some cases with other RegTech products), to achieve sustainable levels of control that enable firms to scale quickly.
Opportunities: What do you see as the main technology and technology-related opportunities for the wealth management sector through 2020
Firstly, the overall conditions for leveraging technology in wealth management are improving:
- The overall level of financial education is rising, increasing people’s demand for more interactive management of their wealth and ability to do so through digital channels.
- Regulators across jurisdictions are keen to understand and support the use of technology to improve consumer’s financial well-being as well as comply with regulation, e.g. the FCA’s ‘Call for Input on Open Finance’ and the set-up of regulatory sandbox environments, designed to bring innovative products to market more quickly.
- Compute costs continue to reduce enabling storage and processing of data on ever larger scale to aid analytics and insights tools.
- The operation of multi-location virtual teams is now standard practice – made possible and optimised through use of latest technology communication tools.
Secondly, accessing high quality software engineering resources in lower-cost locations is becoming easier, as technical literacy and English language skills grow in a greater number of locations. Coupled with necessary expertise to manage remote resources and third-party vendors this can really level the playing field for smaller wealth players versus larger incumbents.
Thirdly, there are great opportunities for the wealth management sector to learn from other industries in the application of digital services and customer experience (in particular retail). Many engineering resources, such as digital designers, are commonly industry-agnostic which leads naturally to this positive sharing of ideas.
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?
We are seeing a lot of interesting work in the following three areas:
- Client-facing technology
- Relationship manager empowerment
- Regulatory technology
Many wealth managers are investing heavily in client facing technology which allows clients to be increasingly and securely connected, to view their portfolios / relevant research and to execute transactions – anytime, anyplace.
While a lot of investment (particularly in larger firms) has been made to improve the back-office processes and technology stacks that typically make up a large part of the cost base, in many respects, empowering the relationship manager has been overlooked. We are now seeing some real focus in this space. Providing a compelling, compliant wealth management service involves a lot of administration and it has long been recognised that relationship managers spend far too much of their time on these. Client on-boarding, prospect management and the creation of investment proposals are all areas in where we are seeing technology used effectively to reduce this administrative burden and therefore increase banker productivity.
Two RegTech areas where we are seeing some really interesting developments are in enhanced client due diligence and cross-border wealth management. There are some really interesting companies out there that are applying cyber intelligence skills and machine learning to open source data to deliver next generation EDD. Cross-border wealth management has always been fraught with regulatory risk. Cross-border marketing has always been an area of high exposure, the ever-evolving rules about how products can be marketed, where they can be marketed and which regulators rules apply has been a historic issue, particularly for larger global institutions. In the past, a lack of clear up to date information has resulted in lost opportunities or even worse - non-compliance. We are now seeing digital solutions come to market that enable direct access for relationship managers to the latest guidance and thus reduce the burden on compliance advisory departments.
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?
One of the most exciting aspects of the evolving technology landscape is the changing shape of the global engineering resource pool and increasing ability to access and collaborate in the traditionally onshore locations. Highly qualified software engineers are emerging in ever greater numbers in particular across Eastern Europe, Latin America, Asia and now Africa, offering the full range of digital software languages, frameworks and infrastructures. This means that with the right guidance, structure and management in place there has never been a greater opportunity to launch and scale a WealthTech, with flexible and affordable development teams only a video call away.
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?
Opus Una is ready to support our clients’ technology drivers in 2020 through the following capabilities:
- Consulting services focusing on digital product design and transformation, delivered by teams with a blend of expert consulting and senior industry practitioner experience.
- Managed off-shore software engineering – providing high quality development capability at lower cost, while mitigating off-shore delivery. Our Fintech prototyping service for early stage companies and entrepreneurs enables a rapid and cost-effective transformation of new business ideas into tangible and testable assets.
- Business expert-led resourcing services - helping clients with a need to define and recruit for permanent technology roles, as they scale and require build out of in-house teams.