The digital offering generates a competitive advantage for client attraction and retention
London, July 22nd 2021 – Objectway, a Global Top 100 fintech leader in the Digital Wealth and Asset Management software, today published the research paper “Setting the Digital Agenda for the Next Normal” in UK Wealth Management, commissioned in association with the premier provider of business performance benchmarking, Compeer.
The findings are based upon a series of face-to-face interviews conducted with a variety of UK Wealth Management firms, including Private Banks, Investment Managers, Full Service Wealth Managers and execution-only Stockbrokers.
The research investigated the main themes that will be setting the Wealth Managers’ digital agenda, and consequently how their IT spending will be gaining momentum from digital change achieved during the pandemic.
When questioned about the relevance of digital services in achieving their business objectives, wealth managers indicated the acquisition of new customers as the most important. Indeed, firms see the digital offering as a method to differentiate themselves in the market.
Closely after this, there is the provision of existing services in a more cost-efficient and scalable way.
Digital is recognised as a means to improve the client experience, whilst reporting and onboarding are currently the key areas of focus which cause frustration for both staff and clients.
During the pandemic, digital tools have demonstrated their value.
In 2020, total IT costs have risen by 15.1%, almost double the previous year (7.8%), as firms raced to upgrade their digital capabilities.
Now firms are looking at how to add more value across the front office and client lifecycle, capitalising on the appetite for digital from both staff and clients.
The major concern firms highlighted is the challenge of building the same level of relationship and trust with clients digitally that can be achieved in person. Despite this concern, data shows that annual client inflows for wealth managers were up to £123bn in 2020, from £112bn in 2019.
Despite the recent increase in demand for face to face meetings from clients due to the progressive loosening of social distancing measures, firms are expecting to continue delivering and enriching their digital wealth services, finding the right balance between traditional and digital services based on each client’s preferences.
Drawing value from client’s data to drive decision making and build a hyper-personalised service is expected to be the further step of an effective digital strategy. There is no doubt over the potential of Artificial Intelligence to do so.
ESG & Sustainable Finance
The main drivers for firms’ ESG strategies relate to keeping up with the upcoming regulatory requirements, generating alpha, responding to client demand and the opportunity to attract new clients and to increase assets under management.
Predictably, all wealth managers see ESG as a commercial opportunity. Nevertheless, interviews revealed that one of the major hurdles in their ESG strategy is how to demonstrate their ESG culture to clients.
Firms are currently at various stages of readiness with respect to ESG policy in place, the vast majority of them being in the process of creating one.
A successful ESG proposition will build on trust and transparency with clients. Wealth managers will have to demonstrate their ESG values align with those of their clients by making it simple to interpret ESG data and understand the impact on their investments.
To find out more, download the full research paper.