Technologies reshaping the Wealth Management Industry

By Faisal Husain, Co-founder and CEO, Synechron

The Wealth Management industry today is continuously evolving, and its fast-paced growth and sheer size (According to a Ernst & Young report, approximately USD 55,000 billion and poised to reach USD 70,000 billion by 2021) makes it absolutely attractive for investors.

According to statistics, the Wealth Management industry in India is valued at approximately INR 100 lakh crore (USD 1.5 trillion) and is expected to double in the next five years, clocking high growth rates (single-digit). This momentum is compelling Wealth Management players to transform their strategies across business, operating models, products and services and even technology, in order to stay relevant and compete with FinTech-enabled businesses, shifting customer expectations, and new regulatory regimes.

Numerous wealth management experts are focused on addressing key client lifecycle challenges, the effects of which have been obstinate and expensive over the years. Specifically, the Wealth Management industry today is facing challenges across various domains including prospect identification, safe navigation through complex regulatory requirements, proactive client life event Identification, creation of customised pitches to clients, improving the hit rate of product pitches without infringing on regulations around suitability of investments, enhanced development of investments and clear and insightful client reporting.

With the advent of transformative Digital technologies, the scenario is now open for Wealth Management enterprises to overcome these challenges with solutions that could result in creating a positive customer impact, enhanced productivity, improved compliance and reduced costs.

Innovation and Technology to the Rescue

Technology today is evolving continuously, with innovative new solutions that are amplifying the Wealth Management industry’s growth. Wealth Managers are looking at creating more efficient operations and enhanced customer satisfaction by leveraging new-age technology. Emerging technologies like Virtual Reality (VR) and Artificial Intelligence (AI) are transforming the Wealth Management industry, on both the front- and back-end, by increasing efficiency and opening up space to new demographics.

Taking a deep dive, technologies that will change the way the Wealth Management industry functions include:

Natural Language Processing (NLP) for an enhanced client experience

Optical Character Recognition (OCR) and NLP integration modules are enabling Wealth Management players to deliver frictionless experiences. NLP can be used to onboard and gather Know Your Customer (KYC) information, garner sentiment analysis for stock selection, create a knowledge-base for advisors, provide customer support, identify a client acting and even acting as a financial virtual assistant. The ability to process both structured and unstructured documents using a combination of OCR and NLP to assess the intent of a document ensures a seamless user experience, thus preventing duplicity of efforts, a significant improvement of onboarding times and a reduction of manual effort required to collect and assess validate documentation.

Predictive Analytics for Asset Managers

Over the last decade, the Wealth Management industry has shifted away to a more holistic approach with investment managers leveraging techniques like predictive analytics as an early warning system for asset risk or even to generate investment ideas. Asset Managers, thus, are able to anticipate demand, predict and manage investor or asset attrition, predict life events and expose the best opportunities for financial investment. Predictive Analytics lets wealth managers have better visibility and insights into their specific book of business, along with a holistic view across the organization. It enables transparency, benchmarking and intelligence apart from improving business economics by identifying and remediating hidden pricing inefficiencies. Furthermore, it facilitates the creation of easy-to-interpret, customizable and interactive charts for better decision-making.

The Virtual Reality (VR) journey

A key challenge facing many Wealth Managers and investors today is that the ongoing advisory experience focuses on communicating investment returns rather than really engaging wealth managers and investors. Creating the client’s financial journey based on financial scenarios, risk analysis, and goals, a VR-simulated journey into the impact of investment decisions can help Wealth Managers connect with their end-users. Furthermore, VR’s focus on gamifying the investment experience ensures investors experience the benefits of disciplined investing with an advisor. The interactive storytelling and immersive experience that VR brings enhances user experience and facilitates greater client engagement. Integrated analytics and ease of navigation through current holdings helps calculate an accurate alignment of end goals.

Blockchain for Client Book Building

The ever-reliable and robust Blockchain network is being leveraged increasingly today by Wealth Management players to create Smart Contracts - computer protocols intended to digitally facilitate, verify, or enforce the negotiation or performance of a contract- that allow wealth managers to actively monitor the client book. Blockchain as a technology is highly flexible and has the potential to create frictionless procedures that could be leveraged at various points in the client lifecycle including client onboarding, model portfolio management, faster clearance and settlement of trades and easing compliance and regulatory challenges associated with KYC and Anti-money Laundering (AML).

The Step Forward

Wealth Managers today are facing grave challenges. These include an increasingly complex line-up of products for increasingly sophisticated and well-informed investors. Shifting customer expectations, increasing demand for self-service and growing competition fueled by robot advisor solutions which are appealing to millennials and high-net-worth (HNWs) clients alike are creating a challenging environment. Gamification, Augmented Reality (AR) and VR are creating opportunities for a more competitive advisory training programs and immersive goals-based planning scenarios. Capitalizing on these trends and technological advancements is indeed positively impacting businesses and helping them to stay relevant and competitive.