Uday-NimmakayalaUday Nimmakayala, CEO at WealthObjects, discusses why it is important for wealth firms to innovate and stay ahead of the competition on their digital transformation journey…

Millennials have come to expect a completely seamless digital experience, particularly from the likes of Facebook, Google, Apple, and Amazon. Over the next few decades, it is expected that over $30 trillion will be passed on from baby boomers to millennials, meaning that this generation will need the digital financial services and customer experiences to match other industries.

Traditionally, wealth firms have lagged behind other sectors in terms of their tech offering, but customers of all demographics are increasingly expecting simple UI interaction and streamlined processes from their financial services provider.

Banks are known to have large, clunky legacy systems that are often capital-intensive, time-consuming and difficult to manage. Legacy systems are rarely discontinued and have contributed to increasing complexity, which means financial firms often find it challenging to provide a bank-wide view to their customers and have lacked impetus for digital innovation.

Younger investors are looking for digital tools coupled with human advice

Today, a fully digital experience is not just an expectation for millennials and the mass affluents, but also for high-net-worth-individuals (HNWIs) and premier banking customers. These clients expect their wealth managers to offer a superior digital service, as well as transparency in fees.

Balancing automation with human advice

Taking advantage of digital capabilities, automated investing platforms, or robo-advisors, have started to gain significant traction in the field. The technology offers streamlined onboarding and transparent investing, thereby serving clients with a much better digital experience.

By making the value chain digital and reducing fees, robo-advisors have certainly been an attractive option for retail customers. However, a digital offering encompassing accessibility and transparency has also attracted other customer segments, from mass affluent customers to HNWIs. While HNWIs show a relatively limited interest in robo-advisors, they still demand an omnichannel experience and an online wealth offering, perhaps video or web chat features to connect with their relationship managers.

A recent study from Gallup shows that most investors still want human advice and that younger investors are looking for digital tools coupled with human advice. In this way, firms should be launching various business models including digital-only and hybrid digital advisory to suit their customer needs.

Wealth is a continuous life journey and businesses should be able to anticipate customer needs by being client-centric rather than product-centric. A modular approach can be an effective strategy for future-proofing a firm’s technology, and helping them reach customers faster and at a fraction of the cost.

Plug and play models easily integrate with businesses’ existing systems without adding additional layers of complexity. Choosing from a variety of digital services, such as automated investing, financial planning, client onboarding and digital engagement, allows businesses to devise their own customised models and differentiate themselves from the competition.

Organisations should be taking early advantage of the opportunity to collaborate with B2B FinTech companies

Delivering automated client-centric solutions is the way forward, and this strategy will become the norm for all retail-focused financial services firms in the future.

Leveraging FinTech opportunities

Institutions, both large and small, can and should leverage FinTech capabilities to gain competitive advantage, stay relevant, and reaccelerate growth across segments. Since the 2008 financial crisis, customers have lost trust in banks, and small FinTech companies across the globe have attracted customers with their unbiased advice, easy to use interface and transparent solutions.

FinTech start-ups are increasing and it is estimated that there are around 6,500 FinTech start-ups across Asia, the UK and the United States. It is only a matter of time before some of these players become part of a trusted establishment. Not just the FinTech start-ups but non-financial services such as telcos and social media giants have also started to join the FinTech revolution.

Organisations should be taking early advantage of this opportunity to collaborate with B2B FinTech companies, and test products with pilot customers. It is possible to launch a digital proposition that suits any business model be it in retail banking, private banking or wealth management in less than three months.

Numerous surveys show that customers are willing to switch to companies capable of delivering a seamless digital service. Therefore incumbent financial services need to move faster on their digital transformation journey to keep hold of existing customers and continue to innovate in order to gain further market share.