The digitalisation of wealth management

28 September 2020
Physical distancing measures to prevent the spread of Covid-19 have forced a rethink of client-facing banking

The Covid-19 pandemic has rapidly accelerated the expansion of digital functionality in the banking sector.

One outcome of this has been a significant extension in the reach of new technological capabilities into the hitherto slow-moving business of wealth management.

The situation has led to changes in the behaviour of wealth management advisers towards their clients and placed a greater emphasis on remote engagement over face-to-face interaction.

Digital projects can no longer be postponed and medium- to long-term plans have been re-evaluated to meet shifting client needs for tailored solutions and easily accessible financial management platforms.

Greater choice

The adoption rate for digital wealth-management solutions has significantly increased during the pandemic. A mobile fixed income platform released in African markets in early 2020 by Standard Chartered saw a 250 per cent increase in wealth management transactions booked between March and April.

By July, the service was being used for 50 per cent of fixed income transactions.

In the Middle East, a study conducted by EY suggests that 25 per cent of wealth management clients in the region receive financial advice via mobile applications. Fifty-three per cent of clients placed importance on wealth managers being digitally savvy.

Due to the Covid-19 pandemic, the diversification of digital product offerings in investments has given clients greater choice over where to invest, based on market volatility. In June, Standard Chartered product sales rose to an all-time high as a result of increased accessibility via digital channels.

The diversification of digital products has also markedly improved access to wealth protection, with a 94 per cent digital adoption rate for general insurance in African markets during the same period. In the UAE, Standard Chartered’s life insurance business had the highest demand for the past three years.

The human touch

Customers nevertheless still want to interact with an experienced professional who can explain the strategies proposed by the systems and offer support in the decision-making process.

Deloitte notes that a relationship-driven business model with communication channels including telephone, email and face-to-face meetings will not become obsolete, but will instead shift to digitally enabled interactions via intelligent solutions and social media.

During the pandemic, Standard Chartered has been conducting webinars to reach 17,500 clients in Africa and the Middle East to keep customers up to date on market developments and investment strategies without the need to meet face to face. 

The company is now moving towards a hybrid model featuring both automated services and services with a human element. Clients can engage with relationship managers or complete investment transactions online. 

New business models

Based on current trends, the wealth management provider model will expand and refocus over the next few years. As clients’ needs shift, services and interactions will evolve in various ways.

For years, wealth management advice meant a client paired with a dedicated human adviser. More recently, as algorithms have become a trending topic, many have chosen the technology-only route, citing the lower cost and around-the-clock access it provides.

Many customers can already explore investment and life insurance options, execute transactions, review their portfolios and receive guidance on personal investment plans through an app. However, for clients that have material assets to invest, the Covid-19 pandemic has revealed the importance of pairing a human relationship with the support of technology. 

It is becoming apparent that companies that can provide an automated platform with periodic access to a human adviser are preferred across a range of investor profiles. In this age of information overload, banks must curate diverse market research and combine this with their own expertise to help clients navigate financial markets and make the most of their investments.

There will always be a balancing act for wealth management between the advantages of digital services, such as instant access to information and tools, and the role of human interaction in reinforcing trust in institutions, especially during times when people have doubts about the future.

Even before the pandemic, the need for different strategies to accommodate technological innovation in the wealth management industry was clear, and people are now embracing the much-needed advancements.

Wealth managers have been quick to adapt, and clients should take comfort from knowing that they are supported by dynamic individuals and cutting-edge technology. Banks and wealth management have shown not only the capability to adapt, but a willingness that will benefit the industry and clients in the long term. 

About the author

Owen Young is the regional head of wealth management for Europe, Middle East and Africa at Standard Chartered Bank

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