1.1. Current status & challenges
Wealth management is no exception to the global trend towards digitalization. At New Access, we do not know of a single client or prospect, regardless of the market segment, that does not have at least “some” strategic digitalization projects high on their agenda.

Private banks and wealth managers addressing the global market of high and ultra-high net worth clients are facing specific challenges:

• The trusted and personalized relationship between the client and the banker, advisor, or relationship manager is a key part of the service provided. A more digital client-to-wealth manager interaction should not reduce this added value. 
• Ability and willingness to use technology is far from being uniform across clients for various reasons including age or perceived level of personal “digital security”. Many clients would prefer to choose when and for what the interaction should be digital, rather than have it imposed to them. One could speak of “digitalization at will”.

These challenges should not deter private banks and wealth managers from engaging further with digitalization. They should rather influence the way it is implemented. The need for proper balance has been made obvious in the 2020 sanitary crisis: in all aspects of business, lock-down constraints have made any available digitalization a vital benefit. At the same time, most people have suffered from the drastic limitation of the human-to-human interaction and, maybe, realize its value even more.

The wealth management industry faces many other challenges, including constant margins erosion, changing client expectations and increased constraints on regulatory compliance. Over the last years, all these challenges have been strong incentives for another form of digital transformation. The game changer was probably the shift to a client-centric approach, rather than an account-centric approach, imposed by regulators in various areas such as Automatic Exchange of Information, payment services, investor protection (e.g. MiFID), prospect management and data protection (GDPR). All these requirements have made it essentially impossible to keep operational cost under control without significant “front-to-back” automation.

1.2. Impetus to change & potential benefits
It seems only logical that a well-carried out digital transformation should address both challenges and, at the same time:

• Bring (not impose) full digital availability to ever more demanding clients 
• Implement a value-adding regulatory and compliance framework at controlled cost.

This is sometimes easier said than done. It is not uncommon to see private banks or wealth managers looking to implement a new digital service with a quasi “front-only” solution poorly integrated to the bank’s processes, and possibly centered on one specific urgent need. This approach brings benefits, most importantly a shorter time to market, but it may have adverse effects: the operational cost may end up being increased and the limited perspective may turn into a liability. What if the digital signature introduced for onboarding does not easily integrate with the platform for existing clients? What if your client portal is way more rigid than your core platform and ends up reducing your capacity to innovate?

We believe that any step in the digital transformation should add value to the relationship between the client, the relationship manager and the wealth management institution. In other words, the benefit is greatest when the client can freely choose between a digital or non-digital channel, a human interaction or an automated interaction, and any of this choice is handled in an integrated and cost-optimal way by the platform. Technology and digitalization should help and add value to the relation but will definitively not replace the role of the bankers, relationship managers or investment managers

1.3. Opportunities & actions
Client digital engagement is more than ever a priority, and it must be implemented in a sustainable, valueadding, and cost-effective way.

Having worked with more than 70 institutions in various jurisdictions, we have witnessed and assisted a key transformation of the client’s role, into a fullfledged participation in the institution’s processes. This view is aligned with the “digitalization at will” approach we recommend for high and ultra-high net worth clients: in some variants of a digitalized process, say an investment proposal, a client may want to quasi self-service, while in other variants of the same process, other clients may want to rely on the assistance, advice and expertise of a trusted relationship manager.

We believe that fully including the client as part of the institution’s core processes should be at the heart of the digital transformation. This change goes far beyond IT and it is not surprising to observe in the market more and more “Front-Office COO” positions being created.

This central idea has far-reaching consequences. Ideally:

• The processes involving client interaction, digital or not, should be implemented in a unique, consistent, and digitally enabled platform.
• The digital platform used by the client and the wealth manager should be the same.
• The digital experience of the client and of the relationship manager should be very similar if not identical.
• At the same time, the platform should be open to the integration of best-of-breed, specialized FinTech/RegTech, e.g. a risk engine for portfolio optimization and risk valuation or a cross border check solution.

Providing clients with a front-end which is the exact reflect of the relationship manager’s is not easy. It means that assets, performance, reports, and client data should come from the same source, and be presented similarly.

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This article was originally part of The Wealth Mosaic's WealthTech Views Client Engagement Report. You can access and download the full report here: 
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