Change is coming: How human behaviour and tech will shape wealth and asset management

TAGS: Wealth management / Wealthtech /
Feb. 17, 2021 / Axell Team

"The future depends on what you choose to do today."

The past 12 months have catalysed global digital transformation trends that have existed within wealth and asset management for years. However, they are now accelerating at an unprecedented pace.

Traditional firms are facing shifts in consumer behaviour, new competition from pure digital players, and increased regulation obligations. All against the backdrop of slow economic growth and market volatility.

So, in the face of rapid change how do traditional wealth managers remain competitive into the future?

6 Key Trends and Opportunities for Wealth & Asset Managers

We’ve narrowed down the macro, technology and behavioural trends that are likely to impact the wealth and asset management industry over the next decade. 

Here we provide areas of opportunities for traditional firms with emerging Israeli tech solutions that are partnering with funds to innovate across the value chain.

After a decade of persistently low interest rates, investors are looking for new profitable asset classes while balancing risk. Meanwhile, technology is making investment more accessible to the masses.

Areas of opportunity:

Removing barriers to entry for traditional investment classes (e.g., property), New product opportunities, Offering exposure to a range of investment classes.

Example solutions:

  

Billions of dollars of wealth will be transferred to Millennials over the next decade creating a need to redefine client relationships to meet new expectations.

Areas of opportunity:

Wealth management content and expertise; Transparent, simple fees; Proactive retention and engagement.

Solution examples:

        

Demand for digital wealth solutions across the client lifecycle is now intergenerational and no longer optional. Traditional players can remain competitive by offering a hybrid of Robo and Human Advice.

Areas of opportunity:

Digital self-service capabilities; Integrating human and digital advice; Cross/up-sell from roboadvice; Managing operational costs; Demonstrating value

Solution examples:

     

Growing momentum in ESG investing is only predicted to accelerate with the ongoing generational change and the risks posed by environmental and social issues.

Areas of opportunity:

Regular validation of ESG investment status; Managing compliance risk of ESG investments; Leveraging data to show impact; Simple ESG investment solutions

Solution examples:

   

Since COVID-19, there has been a dramatic spike in cyber-attacks on incumbents placing a greater need on IT security and risk management.

Areas of opportunities: 

Strengthening IT security; prioritising data protection; digital identity management

Solution examples:

 

By improving operational efficiency through digitising manual processes, businesses can save costs and create a better customer experience.

Areas of opportunity:

Digital on-boarding; Portfolio updates; Client communication and admin

Example solutions:

 

To summarise

Growth through digital transformation will be how traditional wealth managers compete against WealthTech over the next decade. The keys to success are:

  1. Collaboration with the FinTech ecosystem is critical 
    Emerging technology should be seen as a strategic partner for traditional wealth managers, not a threat. Leveraging cutting-edge tech and customising it so it’s fit-for-purpose, will be how incumbents remain competitive.
  2. Championing Digital transformation comes from the top
    Executive teams need to give authority and create space for teams within their firms to test and learn, innovate and design new solutions. Once a few use cases have proven to be viable, they can be integrated across business departments and assigned to business leads to own.
  3. Creating new value from alternative sources

    Traditional firms need to think strategically about how to generate value in an industry under increasing cost and revenue pressures. Leveraging unique organisational capabilities via access to data and client touchpoints are some avenues for wealth managers to explore.

Read the full report

Deep dive into the implications of these trends for the wealth and asset management industry in our full report.

We also explore solutions and showcase technology providers that have built digital solutions across the business value chain.

Axell, Accelerating Digital Transformation in Finance & Insurance

Axell provides strategic advisory services for incumbent financial services companies by challenging them to rethink business models, client experience, data and technology.

We structure and build innovative digital businesses for our clients through effective collaboration with our technology partners.

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