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Democratizing Wealth: there is a wind of change blowing in wealth management

Karl im Brahm

CEO DIE SOFTWARE Objectway Group


Audio Transcript

In this and upcoming episodes, in collaboration with Eric, COO from Bethmann ABN Amro, and Kerstin, Head of Zeedin from Hauck Aufhäuser Lamp, we would deepen the topic of democratization of Wealth Management, touching the many aspects that are impacting and shaping the next future of Wealth.
Primary question we’ll try to answer here is: What are the triggers that have a massive impact on wealth management?
To begin with, we’re currently operating in a fast-changing client demands scenario which lead to massive asset shifts within the market. Indeed, we see a growing segment of wealthy people, large assets are being transferred as the generation of inheritances increases and the token economy enables participation in other asset classes.
Such an environment has produced increased and strong competition in the wealth management and banking industry, together with accelerated innovation. Chief driver of this innovation is changing customer behaviours. Customers are nowadays looking for hybrid offerings, seamless, digital services and providers that incorporates expertise, perfect data and technology support.
Technology is therefore also fundamental, in the form of Cloud Platforms that enable constant innovation, data driven techniques and AI that change customer segmentation, and finally Blockchain, which is suitable for all use cases in the banking sector.
However, global shocks are threatening the stability of financial markets. These include wars, the collapse of global supply chains and the unchanged monetary policy of the central banks. As a result, nothing can be planned anymore and that is a poison for the capital markets.
Now, what does this all mean for wealth managers?
Well, true to the motto demand creates supply and new providers are entering the market (neobanks, brokers, fintechs, bigtechs) accelerating the change process among asset managers.
The fast ones that are customer-centric, using modern and reliable technology, and have their cost-income ratio under control will survive.
Concretely, to benefit from this democratization, providers will be required to:

  • First, rely on cloud technology to increase efficiency, scalability and resilience.
  • Second, create a collaborative API ecosystem.
  • Be open to new technologies, push innovation and continuously adapt their business model.
  • Use the data treasure for the benefit of the customer along the entire value chain.
  • And last but not least, create a unique customer journey with a high degree of customisation.

To sum up, we said that wealth management and its market players are both undergoing the biggest changes in decades. This development represents a valuable opportunity to regularly adapt one’s business model and enhance the digital customer experience. On the backdrop of this, the use of Cloud, API models and open platform will be increasingly fundamental. Surely, being bold and thinking big will pay back, as it will get smaller on its own.
The formula of success? Front-end as individual as possible Back-end standardised and STP automated.