The banking landscape has changed significantly over the past decade. With rapid advancements in technology, evolving customer expectations, and increased competition from FinTech companies, banking relationship managers face a myriad of challenges that will remain relevant in 2024. Backed by statistics and research, this article delves into the major pain points for banking relationship managers in 2024, providing insights into the industry's most pressing concerns and possible solutions.

The rise of digitalisation: adapting to the new normal

Embracing digital channels in a hybrid approach
The rise of digital channels has posed a significant challenge to banking relationship managers in recent years. According to a McKinsey study, digital adoption has moved from a question to a concrete reality. With approximately 73% of global interactions with banks now taking place through digital channels.

This shift in customer behavior has forced relationship managers to adapt and develop new strategies to engage with clients digitally.

However, when it comes to financial advice:

• only 17% prefer to receive and process advice entirely digitally, finds an Accenture study.
• Roughly two-thirds of clients value in-person advice at key stages in the financial planning cycle and seek a hybrid approach: self-service when they want it and face-to-face when they need it.

It is therefore critical for advisors to understand and predict these moments of importance to their clients. Technology is the driver to identify these signals with data.

The threat of new technologies and FinTech disruption
Another major pain point for banking relationship managers in 2024 is the increasing competition from FinTech companies:

• According to a McKinsey study, FinTech revenues are expected to grow nearly three times faster than traditional banking revenues between 2023 and 2028.
• And the proportion of customers choosing FinTechs to manage their wealth is expected to double from 9% to 18% over the next three years, as per a recent PwC study.

Meanwhile, Accenture research shows that younger investors are more likely to look to non-traditional sources for financial advice. With a significant percentage considering wealth products and services from tech giants such as Google, Apple and Facebook.

In addition, the study also shows that younger investors exhibit a higher trust in algorithm-generated advice than their older counterparts. This highlights a shift in preferences.

Evolving customer expectations: staying ahead of the curve

Personalisation and proactivity
In 2024, customers will expect a banking experience that goes beyond a one-size-fits-all approach:

• According to an Accenture study, nearly 90% of mid-High Net Worth Investors (HNWI) feel that the advice they receive from their advisor is too generic.
• And almost 39% of respondents want more proactive communication from their advisor.

Underscoring the importance of personalisation, the study found that 34% of respondents would increase their investments if they received a hyper-personalised experience.

This puts pressure on advisors to provide customised solutions and proactively address their clients’ financial needs.

The rise of ESG products and value investing
Investors increasingly seek customised advice and investments that align with their personal values, creating an opportunity for relationship managers to stand out:

• In an Accenture study, 71% of investors said they prefer an advisor whose values match their own.
• According to Morgan Stanley’s Sustainability Survey, 84% of respondents want the ability to tailor their investments to their values, and that number rises to 90% among Millennials.

Interest in Environmental, Social, and Governance (ESG) products has grown in recent years as more investors prioritise the impact of their investments:

• A recent Accenture study found that 84% plan to invest in ESG products, with 59% seeking advice on these values-based investments, particularly among Gen Z.
• In addition, a study by Capital Group found that 89% of investors incorporate ESG issues into their investment approach in some way.

Regulatory compliance: balancing growth and risk

The burden of compliance
Regulatory compliance will remain a major pain point for bank relationship managers in 2024:

• In fact, a Schroders survey shows that 49% of advisors view regulation as their top concern.
• And nearly three-quarters of respondents to a recent Thomson Reuters survey said they expect regulatory activity to increase.

With ever-changing regulations and increased scrutiny from authorities, compliance has become a complex and time-consuming task. And relationship managers are feeling the strain of navigating these regulations.

Leveraging data and analytics: turning challenges into opportunities

Harnessing data and AI for success
One way to address the biggest pain points for banking relationship managers in 2024 is through the effective use of data and analytics. Financial institutions have access to vast amounts of customer data, which can be used to create personalised experiences, enhance decision-making, and improve risk management.

• A study by McKinsey found that banks that effectively use data analytics can achieve up to 15% higher revenue growth.
• And 85% of advisers now anticipate incorporating AI based technology applications in their advice process in some way in the future.

Technology-enabled client interactions could include providing easy access to advisors, updating clients on market-influencing events, or offering scenario modeling for what-if-analysis of client portfolios. Notably, 65% of clients value the ability to simulate portfolio strategies, underscoring the importance of predictive insights to drive proactive client interactions and improve the quality of advice.

Overcoming data privacy concerns
However, the use of data analytics also raises data privacy and security concerns. Relationship managers must ensure that they comply with data privacy regulations and maintain customer trust while leveraging data analytics.

How to elevate advisory service

Embracing cutting-edge software solutions
Advisory solutions play a pivotal role in streamlining advisory workflows and elevating client-centricity through personalised investment proposals. These solutions enable relationship managers to provide unparalleled service to their clients, while optimising efficiency and saving time.

Intelligent campaign management solutions effectively harness the transformative power of AI and robust analytics. Empowering advisors and relationship managers to embrace a data-driven approach.

Leveraging changing client expectations for success
Another potential answer to the evolving expectations is Goal-Based Wealth Management, which offers a transformative wealth management experience for HNIs and UHNIs. By setting goals and implementing continuous monitoring with portfolio rebalancing, relationship managers can take their services to new heights and create a distinctive offering for their clients.

FAQs

What are the major pain points for banking relationship managers in 2024?
The key pain points include adapting to the rise of digital channels, evolving customer expectations, regulatory compliance, and leveraging data, analytics, and AI.

How has digitalisation affected banking relationship managers?
Digitalisation has led to a shift to digital channels, increased competition from FinTech companies, and the need for relationship managers to adapt their strategies to engage with customers in a hybrid approach that combines digital self-service and face-to-face interactions.

What are the changing customer expectations that relationship managers need to respond to?
Clients are increasingly demanding a personalised and proactive banking experience and are showing a growing interest in value-based investing. This presents an opportunity for relationship managers to differentiate themselves by responding to these needs and providing tailored advice.

What are the key factors in managing regulatory compliance?
Relationship managers must stay abreast of ever-changing regulations, invest in compliance activities, and strike a balance between enforcing regulatory requirements and maintaining client satisfaction.

How can data and analytics help tackle the major pain points for banking relationship managers in 2024?
Data, analytics and AI can be used to create personalised customer experiences, enhance decision-making, improve risk management, and drive revenue growth, while ensuring compliance with data privacy regulations.

Conclusion
The banking industry is facing a multitude of challenges in 2024 for relationship managers, driven by digitalisation, evolving customer expectations, regulatory compliance, and new technologies. To navigate these turbulent waters, banks must adapt their strategies, embrace a hybrid advisory approach, address changing customer preferences through personalisation and proactive communications, invest in innovative solutions, and foster a culture of continuous learning and improvement. By adopting these strategies, they can effectively address the key pain points for bank relationship managers in 2024 and turn these challenges into opportunities for growth and success.

Editor’s Note: This article was originally published in September 2023 and has been completely revised and updated to ensure accuracy and timeliness.

Read the original article here.