Recent survey research conducted jointly by Accenture with PIMFA (the UK wealth industry association), asked C-Level industry executives in eight European countries for their views on post-pandemic industry changes, and where and how their firms would need to reinvent themselves to be future-ready.
Respondents highlighted four key drivers shaping the wealth management firm of tomorrow. These were:
• Increased industry consolidation.
• Cross-sector competition for clients.
• The war for talent.
• The need for greater organisational agility to execute change at an increasingly faster pace.
The other driver was technology —a view expressed by 88% of respondents. Technology is not just seen as an agent of change and modernisation, but also as a key enabler to reinvent the wealth management business.
Emerging technologies coming to the fore
Technology’s growing importance reflects key industry shifts underway. One is shorter technology innovation cycles. Another is the adoption of ‘digital is today’. Moving beyond efforts to improve back-office efficiency, it is expanding rapidly into the front-office to boost client engagement and growth. This was encouraged by the move to remote interactions during the pandemic and, subsequently, the evolution of more hybrid digital and human interaction models with greater levels of client personalisation.
The chart below shows that three technologies stand out. Over 70% of respondents expect advanced customer relationship management (CRM), advanced onboarding/KYC/AML and Cloud solutions to reshape the industry.
Figure 4: Technologies with the strongest expected impact on the evolution of wealth management models to 2025 / Source: Accenture / PMFA Wealth Management Survey, Europe 2022
In both CRM and onboarding, advanced digital capabilities could help address many current pain points in the client and adviser experience. Onboarding is often complex and time-consuming. It is a highly manual and document-intensive process which is frustrating for both clients and advisers. It is also costly and has compliance risks if its processes fall short. By adopting AI and ML, a more conversational personalised and predictive approach could be offered, providing a significantly better onboarding experience.
Beyond this, traditional CRM could be improved at key points of need over a client’s life stage journey evolution. CRM solutions are becoming more advanced, helping both clients and advisers reach new levels of personalised and proactive engagement. By enabling a better balance of hybrid human and technology interactions and delivering compliant servicing, these advanced solutions also help free up advisers’ scarce time to focus more on higher-value tasks. Letting clients self-serve for lower-value-adding activities is driving higher adviser efficiency and productivity.
Firms also see further related impacts, such as scaling the provision of portfolio management and advice. This can be achieved through a deepening understanding of client behaviours. Advisers need to better target key existing and new clients, and proactively educate and alert clients to risks and opportunities around meeting their financial goals.
By addressing these needs with the right blend of human talent, technology and ingenuity, firms can also tackle their adviser talent shortages as advisers can be supported to serve more clients with better tools and dashboards.
Cloud and AI—opening the way to reinvention…
The other game-changing tech capability in our respondents’ top three is Cloud-based solutions. Its high-ranking underlines the Cloud’s increasingly pivotal role—in combination with other leading-edge technologies— as a core driver of enterprise reinvention at speed. Wealth managers are often behind their counterparts in other sectors of financial services in Cloud adoption, and new data residency options within Europe can help the speed of uptake.
Combining Cloud with AI offers an improved, modern technology infrastructure and one that could deliver 360-degree business value through becoming data-driven, achieving faster new product and solution innovation, higher scalability, and better security. It also provides opportunities to leverage green Cloud to reduce carbon footprint and energy consumption—which could also contribute to clients’ perception of a wealth manager as a responsible business.
AI and ML are already being used to streamline aspects of prospecting and portfolio management. Future adoption could increase further with powerful data-driven AI use cases which could include a ‘wealth predicter’ that can mine multiple external data sources to identify the moment when entrepreneurs will sell their business and might need wealth management services. Using this, the wealth manager could contact the client at the right moment of need to offer proactive and timely solutions rather than miss the opportunity. True, there are new risks around AI, such as the need for it to be explainable and free from bias—but these could be overcome through appropriate data-driven strategies.
…and ultimately to the Metaverse
Wealth managers equipped with an agile, scalable, and smart Cloud infrastructure could be well-placed to harness other future technologies that are still in the early stages of evolution. The rise of Web 3.0 and the ‘Internet of place’ is enabling the emergence of the ‘Metaverse continuum’—in turn, creating new future vistas of opportunity.
Some firms are already experimenting and realising this, such as JP Morgan’s creation of a bank branch in the Metaverse. Accenture has used the technology to onboard 150,000 new employees through an immersive experience. Some other wealth managers are exploring how they might use it and where potential monetisation opportunities could exist.
Opportunities can expand even further, as technologies like Blockchain and NFTs could provide an internet of ownership and identity, accelerating the Metaverse’s commercial evolution.
Technology implementation: becoming collaborative — and agile
The challenge for business leaders and managers is to embrace these changes or risk getting left behind. The technology that enables the wealth manager of tomorrow will be very different from the monolithic, multiple, and disjointed systems of the past. They will progressively evolve to embrace fewer, more aligned, technology and data solutions, use cases and collaboration both within and outside the enterprise.
Businesses need new technology action plans. The traditional role of the Chief Information Officer (CIO) will also need to change. As technology becomes more central to business advantage, innovation and value, the CIO will increasingly need to collaborate across the wider C-suite, and with chosen ecosystem partners and will be seen as an educator and guide as all areas of the business navigate from their current state to be future-ready.
There will also be a need to actively transform the current technology and workforce talent as wealth managers will need to excel at key technologies, and change by developing enhanced in-house capabilities in business-critical technologies. This will require ensuring the right mix of current and future technology skills are in place and that they can work in new, more agile ways. There will also be competition for scarce technology talent, and firms will start thinking about new options internally and externally with ecosystem partners such as build, operate and transfer to be able to move forward at pace.
Embarking on the journey
Consistently creating business value with technology is difficult. With an era of ever-stronger competition and compressed change, the challenge for wealth managers is to decide which business-driven technology and talent capabilities are needed today— and what will be needed in the future. Only then, can managers map out a responsive reinvention and compressive change journey guided by an understanding of which combination of technologies, ecosystem partners, and capabilities will best deliver their ambitions for business value and growth.
Note: A version of this article was first published as an Accenture Capital Markets blog.
You can read and download the full WealthTech 2023 Report here.
