Advisory firms urgently need to update their back-office systems if they are to benefit from digital transformation of the sector.
Digital technology is not a new phenomenon, yet advisory firms are still lagging behind when it comes to digital transformation within their organisation.
Over the past few years, we have seen an influx of digital disruptors across the wealth management industry using technologies such as artificial intelligence (AI), which has revolutionised the way in which organisations have changed their interactions with their customers.
Digital technology is now playing a key role in improving customer choice and engagement, particularly among the younger generation who expect to transact in real-time via mobile platforms.
The emphasis has largely been put on the front office, leaving behind back-office systems often perceived as complex or costly to update.
Nevertheless, with the increase in regulation such as MiFfid II and GDPR, and the rising costs of maintaining disparate legacy systems, advisory firms are beginning to recognise the growing need to update their back-office systems.
Digitally transforming core systems can dramatically improve operational efficiencies and streamline processes, freeing up resources for value-added activities and allowing wealth managers to offer a tailored personal service.
In a recent report, 'AI and the Modern Wealth Manager', published by Forbes Insight and Temenos, we discussed how wealth managers that fail to leverage the opportunities offered by AI technologies face an existential crisis.
The deployment of AI technologies in wealth management is gaining traction and a staggering 93 per cent of wealth managers say AI will play a role in the future of their practice, which is expected to improve user experience.
This, in turn, will help wealth managers acquire and retain mass affluent clients.
With new technologies, such as AI, we have seen a balancing act emerging that will define the future of the industry: the blending of man and machine in the advice process delivers better services and results for increasingly tech-savvy high net worth individuals (HNWIs) and mass affluent clients.
It is no secret that technology is becoming a bigger part of wealth management.
Digital transformation is becoming a large part of an organisation’s wellbeing.
For advisory firms to reap the benefits of new technologies, they need an updated back-office system.
We believe, as part of this, it is about streamlining investment management, combining automation with straight-through processing.
From our experience, in larger wealth management firms we now see hybrid advice models, which combine the best aspects of both traditional human advice and automated digital platforms.
In this way, technology allows financial institutions to target new market segments – providers that traditionally focused on the top end are already rolling out solutions for the lower end.