The wealth management sector is evolving rapidly, thanks to the improvements afforded by technology and the threat of being left behind in the quest to smooth and optimise processes, harness data and provide a superior client experience. No surprise then, that changes are as much at the individual firm level as they are at the industry level. Indeed, one of the most visible expressions of this change is in the development of an ecosystem approach.
In recent years we have also seen this concept developing within the banking industry, with some participants offering a subset of products and services, and relying on partner firms within an ecosystem to provide others requested by clients. Challenger banks and FinTechs in particular, have sprung up, offering a small selection of the services provided by full-service or incumbent banks.
In an ecosystem world, it is no surprise that the definition of what constitutes a wealth manager is subject to change as well. A report by McKinsey said that although traditional banks make up half of the market, the other half is now made up of specialists and FinTechs - all of whom contribute to the overall ecosystem by providing a part of what a full-service bank would offer, but by focusing on a smaller set of products and services and aim at doing them exceptionally well.
Wealth managers, too, can form a part of someone else’s ecosystem by embedding their services into other propositions. In this model, potential wealth management clients come across a wealth management solution at their point of need, say when they do a will, arrange a mortgage, or anything else that might potentially lead to a need for a wealth manager. The concept is the same as car finance being available in the car showroom, which can be provided by a lending firm external to the car manufacturer.
Within the ecosystem, there is no need to take the whole service or all of its component parts. Within wealth management itself, we can now see some wealth managers deciding against being a full-service offering and instead offering specialist services, providing a niche part of the whole.
Greengage is one of such offerings. Describing itself as a sort of 'Coutts crossed with Revolut' hybrid, the offering takes the best characteristics of each: personal service combined with technological capabilities and ease of use. It then applies this to offering specialist services to wealthy clients.
Instead of offering a full-service wealth management proposition, the firm has instead offered only the bits where it sees a current gap in the market. The firm began life as a predominantly corporate payments and lending offering for digital firms, trusts and fiduciary services but also counts family offices, High-Net-Worth Individuals (HNWI) with over £5 million, charities, and foundations as its clients.
“We decided to offer a model where we are an entity that does a particular job for a group of wealthy clients. We are not a classic wealth management business; we look at family offices, HNWs, and fiduciary structures, but our services are more geared toward the transactional. We offer our clients payments, cards, and a lending platform - all moderated with a dedicated relationship manager,” says Sean Kiernan, CEO at Greengage.
The firm offers digital assets lending introductions, which have a particular appeal to a certain market segment.
Sean comments: “For our customers that use crypto, we see that on and off ramping is challenging, and we solve that by providing payment accounts in fiat currencies (e.g. GBP, EUR, etc.).”
He says that firms like Greengage are moving the needle when it comes to defining wealth management. “We are literally providing the means to manage certain aspects of wealth, but we are not a traditional wealth manager. Instead, we form one component of the wealth management industry.”
“We felt that the transactional element of private banking was missing from the traditional wealth management asset management proposition and that there was an opportunity to provide that, with the human touch, at an appropriate price point. With that in mind, we looked carefully at the client base, which today is 50% crypto investors. Most of them are also HNWI and also want family office services and trust structures. We thought these were all areas that are underserved by the traditional wealth management model,” says Kiernan.
Thus the proposition is to facilitate digital payments but with a compelling technology and service offering, which is also resonating with a wider client base.
“Many of our customers want to make payments that cross over existing threshold limits, such as buying into real estate or making a sizable investment in a company. Using a normal bank would trigger all sorts of processes that could be time-consuming hoops to jump through. But a conversation with a relationship manager here and it is all done, using the most efficient technology possible. We also have a wider private banking ecosystem available, where we can access best-of-class providers to add on to our core offering, through a panel of providers approach,” he says.
“Indeed, the whole firm is built on a new technology stack so onboarding for our core e-money account services can take as little as two weeks. For risk compliance and CRM, the firm uses Salesforce, and then there are APIs for everything else - again feeding back into the ecosystem concept.
“Our app is sleek and smooth, offering the functionality that our client base wants and needs, and is easy to use with good user experience," says Kiernan.
He says that technology can play an immense role when it comes to cost reduction and removing friction. “It does not matter that our clients are using us for a specific purpose - they expect the technology to be of a high standard, and we have invested heavily in the right infrastructure to provide what clients want and need to go about their business painlessly and seamlessly. The hidden costs of latency, friction, and pain points only really become apparent once you have ‘enjoyed’ the experience of not having it!”
He explains that clients, as standard within the wealth management sector, expect to have all the bells and whistles available to them. “Like with many things in life, you only really hear about it when things go wrong - our clients want an elegant and seamless interface, and they value the service that goes around that. However, there is still a demand for the human being to be available and there to be a means to access that and to build a relationship - we provide that too.”
Going forward, Kiernan is open to embedding the service into other wealth management firms that provide a wider asset management offering (not something that Greengage provides) - to offer a niche and specialist transactional service as a compliment to an overall proposition. “This is the way that the market is moving, but instead of being all things to everyone, we think it better to have mastery over one element and extend our reach via an ecosystem approach,” he says.
Interested in reading the full report? You can read this edition of the UK WealthTech Landscape Report online here.