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Key trends and requirements in wealth management

4th September 2023 – Wealth management remains one of the most ‘humanised’ types of services offered by banks, asset management firms, and private client-centric organisations.

Logo IBS Intelligence Global Fintech Perspectives

Wealth management is one of the most prominent segments in the financial industry that relies on trust and consistency. Nevertheless, it is not immune to change, and must itself adjust to new realities. Roger Portnoy, Chief Strategy Officer of WealthTech Objectway explained to IBS Intelligence how the wealth management sector is being reshaped by the need to ensure strong relationships, personalised engagement and to leverage digital capabilities.

Clients want greater control over how they interact and engage, and this needs to include digital channels for communication, decision support, and authorisation when needed. This approach requires the convergence of personalisation, digitisation and a robust client service model.

As with any other business, a diversification in channel distribution is necessary to help a business to operate economically at scale, as well as create a more personalised engagement model that suits its client base. Firms ideally invest in data management and analytics that assist them in capturing and servicing client preferences.

What are the coming trends in the wealth management space?

Despite the challenges posed by macroeconomic and geopolitical factors, wealth management spending for innovation is expected to grow steadily across 2023, with various trends happening across this sector’s value chain right now. Wealth managers – and more broadly financial services companies of all types – have been experiencing increasing competition over the past 12 months, finding it particularly challenging to win and retain customers.

Therefore, front-end initiatives (onboarding, digital channels, client engagement, and client acquisition tools) come up as the highest priority when it comes to IT budget increases. Wealth managers believe elevating the client experience is one way they can differentiate themselves and stand out from the competition.

First, firms are continuing to invest in expanding their omni-channel capabilities so that they can offer a consistent experience across different forms of engagement. There is a particular emphasis to ensure that security procedures for transactions, communication and authorisation can be handled properly, and comply with data privacy and data protection regulation.

Second, firms are continuing to investigate how much clients want to initiate self-service over managed service provision in their engagement. Managed engagement through client service isn’t also as fast, nor as accurate as client self-service, particularly in relation to capturing and processing on-boarding data, and thus firms are seeking to introduce new ways to assist clients in being able to self-serve in key areas where past failures have harmed investor confidence or created reputational damage.

Third, firms are increasingly looking to improve the user experience by embedding more functional APIs in both the early stage of the client lifecycle as well as into key areas like asset transfers, custodial account opening, and corporate action handling. With more vendors able to provide APIs for efficient data exchange as well as more advanced business process management, wealth firms are investing more effort into low code/no code solution designs that can make it easier for them to both use APIs as well as alter them when richer data, or a more complex operational need is required. The pace of cloud adoption, the surge in activity around AI, and a focus on investment product and platform innovation projects also highlight the scale of this shift in attitudes.

What are Objectway’s own customer onboarding strategies?

Objectway believes that different types of wealth firms, embodying different solution designs, and client profiles, need an adaptive approach. The firm’s adaptive model offers clients several different digital configuration options for onboarding. These options can accommodate different client types, as well as incorporate journeys that range from full self-service to full firm-managed, alongside many hybrid approaches in between. Some of these solutions are created to be highly adaptive and responsive to mobile engagement, while others are enabled through digital collaboration between advisers, client service and the end client.

Are you leveraging newer technology including AI/ChatGPT?

We’re currently leveraging AI, machine learning and algorithms in the pursuit of superior performance in investing strategies, more personalised portfolio designs, and more efficient and automated back-office operations. This comes via using these technologies to improve data extraction and standardisation, while also reducing exception handling by capturing and rectifying data errors before they necessitate costly remediation.

This is the more common pathway for wealth managers to apply such advanced tools in a transformative way. This is because the use of AI in areas like DevOps, pure development, quality assurance, and administration enable these areas to become far more automated, frictionless, and optimised, changing the role of people from one of execution to one of governance, oversight, and enhancement.

On the engagement side, AI already has a significant role to play in helping firms build more frictionless onboarding and engagement journeys and ensuring that bad actors find it very difficult to create denial of service or data intrusion problems. AI can also help with client needs by enabling advisers to identify the next best action for clients via their preferences more quickly and to initiate recommendations that can consider a greater variation of attributes.

We have looked at the possibility of pushing AI through large learning models such as ChatGPT into the front office but have seen the industry is not fully comfortable around some of the risks related to machine-based decision support and recommendations within highly regulated functions. Nonetheless, we have clients that are developing investment strategies that leverage pattern recognition to deliver improved risk/reward designs managing portfolios through our investment management solutions, having incorporated our optimisation algorithms to achieve strategic and tactical asset allocation for optimal model portfolios.

Digital onboarding and digital transformation

The wealth management industry has two huge opportunities that it is likely to fully meet only through digital transformation as well as the further advancement of digital onboarding. The first of these relates to the generational wealth transfer happening around the world, which will see, for the first time, digital natives become the dominant wealth accumulators in the population. While their direct ownership is still very small relative to baby boomers today, they represent the future for the wealth management industry, and thus look toward digital-first and hybrid solution designs for investment solutions and financial advisory.

These individuals are coming into the market where they – and the regulators – want to see digital solutions provide greater rather than less care, and support sustainability and suitability in terms of products and services in a more personalised way. Digital onboarding offers the best way to gather the intelligence needed to understand client objectives, preferences and needs and offer the right solutions in time at the right cost.

At the same time, as this group is growing in importance, baby boomers are living longer, and requiring more complex financial planning in retirement. This creates a huge opportunity for the industry to not only extend and expand its service and solution relationship to assist with wealth preservation and income generation, but also to deliver investment services that can bridge the age divide.

Objectway Blue quote

Manual processing, as opposed to digital engagement, and intelligent automation, in the client lifecycle represents not only a significant barrier to profitability, but also to client satisfaction and trust. Firms need to optimise their business configuration to take advantage of technology advancement and excellence in outsourcing where it exists and scales.


Roger Portnoy

Chief Strategy Officer Objectway