The challenges faced by wealth managers in adapting to the digital environment that now surrounds them, and their ability to successfully deliver a digitally-empowered business, are huge. This is not just a technology challenge, it’s not just a new product launch, nor it is an operating model tweak. This is akin to the industry’s own Cultural Revolution. I don’t think this thinking and commentary is new or enlightening but it was reaffirmed to me in listening to a panel of industry participants and influencers at a recent Appway-hosted thought leadership event in London.

The event, which was hosted by Appway and moderated by well-known industry player Steve Dyson, director at London-based consultancy firm Investment and Wealth Management Consultants, included three UK-based panelists: Sebastian Dovey, co-founder of research and consulting firm Scorpio Partnership and Wealth Briefing’s 2018 Wealth Management Thought Leader of the Year (and also my old boss!), Bijna K Dasani, Head of Group Architecture and Strategy at Lloyds Banking Group, and Stephen Manly, UK Sales Director at Appway.

What did I learn from listening to the panel?
The panelists started with a ‘stocktaking’ of the key issues that we are facing: we live in a world of digital disruption, there are new digitally native competitors, clients want access and personalisation, the industry wants to reduce costs and raise efficiencies, new business models are emerging, wealth managers need to embrace digital change and do more and be more rigorous to understand their customers, they need to be clear where they can add value, they are hampered by legacy. Sebastian highlighted the depth of the challenge resulting from these observations by stating that “we are in a consumer industry first and a financial services industry second”. Where do we stand compared with other consumer industries today?

Hearing these industry topics didn’t really surprise me, however. What did catch my attention were the panel’s views on what is happening in and around them, including some positive market developments. These are the signals that will determine both the individual path forward for firms and the competitive challenge they will face as their journeys develop.

Here are some examples that the panelists mentioned:

• The ability and application of data to design all-inclusive offerings for the client as opposed to single product offerings
• Pattern recognition (traditionally based on the advisor’s intuition and knowledge but going forward using technology) to compare customers’ behaviour over time and codify and scale the experience
• Testing new capabilities like messaging platforms to support applications – Bijna used an example from retail banking (the mortgage origination process) to demonstrate how customer interactions could become so much more efficient for the bank – and engaging for the customer - by leveraging a mainstream platform like WhatsApp
• And, as a result, viewing technology not as a disruptor but as an enabler for “a new digital way of life”

So where are we at?
Well, from my perspective, we are not at a point where we have to rip everything up and start again. But we are in a world where much of what was considered the norm  is seriously under review and may play no role in the future shape and orientation of the sector. The basic building blocks of the industry might still remain. But we soon need to have answers ready to our customers’ critical questions, such as: Why do I need a relationship manager? Why can I only become a client with a million dollars? Why is that the service offering? What are you charging me for? Many questions, and maybe not yet too many answers that we can provider. This picture is clearly emerging, both for the wealth management industry as a whole as well as for individual wealth management firms.

What is clear is that on the one side there are many challenges for firms to overcome in dealing with the changes around the sector, while on the other side there are as many if not more options and opportunities that could be pursued. The industry is faced with complexity both as challenges to their businesses and opportunities to chase. That is a dangerous mix which might lead some (or many) to simply grind to a halt, unable to manage and overcome the burden.

What it says to me is that alongside running their businesses as normal, at a strategic level, wealth managers need to strip everything back to the core, to determine the type of business they want to be, for whom, how, what, and so on. This is true at the strategic level as well as at the technological level. A solid base will allow for flexibility and agility as the market demands continue to evolve.

A summary of the panel discussion can be downloaded from the Appway website.

Appway’s next UK Wealth Management Thought Leadership Event will take place on 8 November 2018 at 4 pm at the Eight Club Moorgate, London. If you are interested in joining, contact Appway at emea@appway.com.