Forty years ago, when I worked in telecommunications and Mercury Communications was beating the digital drum, we broke BT’s monopoly and created new services that had just not been possible in the previous analogue world.
I can now feel these same seismic forces at work in the Wealth Management market.
The key point of differentiation back then was not just to do with the technology. It was to do with how Mercury – a digital company – thought, compared to how BT – an analogue company – thought. The big lesson for BT was this: if you cannot think like your customers, you have zero chance of giving them the services they demand.
The prevailing financial advisor engagement model is quite simply, unsustainable. Without digital enablement, advisors have no hope of scaling their work to serve a larger customer base.
Why? Because there are only so many hours in the day and there are only so many calls that can be made within that time. And the fact that millennial customers are demanding ever-increasing amounts of information along with ever-faster execution of decisions.
Why has the financial services industry been so slow to embrace digital solutions? The answer in part, is due to legacy technology constraints and in some cases, usability issues that have tended to keep the adoption rate low.
The rest of the answer is to do with how the industry is still thinking. It is still thinking in analogue – at the same time as more and more wealth management firms are shifting resources toward digital enablement. They are attracting tech-savvy talent to implement digital solutions on accessible, interconnected platforms to help acquire and service clients while they extend and retain client relationships.
We need to recognise that the operating environment is changing. Technology is lowering barriers to market entry, opening the gates to a completely new set of formidable digital competitors intent on far-reaching disruption, all armed with innovative capabilities. Silicon Valley giants and agile FinTechs are reshaping the playing field by elevating the customer experience into many new areas of interaction. Watch Revolut eat the incumbents’ lunch – and they have not even entered the market yet!
Client behaviour is changing too, across all segments. Today’s wealth management clients already expect a seamless customer experience that is fast, convenient and intuitive. So customers will naturally expect online tools and smartphone-based functionality to be standard.
Wealth management firms understand that they should leverage technology to engage more efficiently and effectively with clients and prospects, but many struggle with the ‘how’. They are still thinking ‘analogue’. Some firms don’t even know what client data they have, much less how to build a digital enablement solution.
There are therefore two critical points that need to be addressed. First, the back and middle office reconciliation must be built to deliver API-led services. Second, the UI must ensure PWA integration across any device – and fast.
So here is my simple message: think digital – or die!
Steve Bird is the Commercial Director at Idea Group
Entrepreneurial, lateral-thinking and team-focused, Steve has an outstanding record of success in growing businesses within the highly regulated telecoms and financial services markets. Steve’s work for Idea Group focuses on maximising profitability through the guided development and targeted marketing of commercially viable products.