There are two big summits this November, one on wealth management and the other on wealthtech. They might appear to cater to slightly different audiences, yet when it comes to trends facing the world of savings and investments, there’s an exciting, opportunity-laden convergence.
Both the Global WealthTech Summit and Global Wealth Management Summit take place in London from November 6, attracting international speakers on topics ranging from consolidation and crypto to AI and addressable markets.
What really stands out, though, is the joint focus on operational resilience (OpRes), regulatory compliance and the great wealth transfer. And it might come as a surprise to many wealth management businesses that these three trends are very much interlinked.
Here’s why. Lots of firms overlook the fact that digital transformation can take care of key aspects of OpRes and compliance. That is, if robust technologies are in place. For example, application programming interfaces (APIs) with failover mechanisms and serverless computing platforms, which minimise disruptions and ensure high availability, even in the face of unexpected challenges.
These powerful tools give wealth management teams the confidence to zoom out from OpRes and regulation and expand their focus to market-based challenges like the great wealth transfer. Sadly, what often happens is that keeping up with rules and improving efficiency becomes an end in itself, impeding innovation.
In order to delve a little deeper into these three trends, we answer some of the questions set to be posed during sessions at the two summits.
1. Where could technology be best used to drive operational efficiency?
There are many reasons for optimising operational efficiency but these two stand out: cost and customer service – and technology can help here. By switching from on-premise systems to cloud-based software-as-a-service (SaaS) platforms, it’s possible to cut costs by as much as 40 percent initially.
This is because with a remote SaaS system, functions such as testing, production and infrastructure management are largely automated, minimising human inputs. Fully regression tested and backwardly compatible upgrades take place offsite without the need for lengthy installations.
Additionally, infrastructure that doesn’t require teams to switch between different systems to manually import and export data can dramatically improve operational efficiency. With a fully interoperable system, critical wealth management technologies such as transfer gateways and CRM systems can work together seamlessly, freeing up colleagues to better support customers and new growth initiatives.
2. What are best practices for third-party vendor risk?
Again, platform interoperability is an important part of the answer. The wealth management ecosystem is built upon a wide range of platforms of varying ages. Consequently, a key issue facing firms today is the embeddedness of their tech. Built up over years, it’s extremely difficult to remove or switch.
Modular platforms, which are highly interoperable, get around this challenge by enabling wealth managers to update or add new systems on a component-by-component basis – making it easier for businesses to start their digital transformation journey.
3. What strategies can be implemented to protect against cyber threats and ensure data security?
Security threats are a fact of life in financial services. But cyber criminals can be outwitted by digital innovation. There are many strategies that wealth managers can adopt to ward off attacks.
From an infrastructure perspective it’s vital that platforms encrypt all data, require multi-factor authentication and control users’ access through layered permissions. System operators should also conduct continuous security threat scans and monitoring of incident responses, and carry out regular penetration tests to identify weaknesses.
Additionally, when adopting cloud technology, resources should be set up in a private, secure area where you have control. Within this space, smaller sections can be used to organise and protect resources, with rules in place to decide who can access them. This protects your data and prevents unauthorised access, while providing flexibility and scalability typical of cloud services.
4. How do next-generation clients’ values and demands differ, and how are private banks prioritising touchpoints in order to build their trust over time?
This question brings to mind a recent roundtable WealthOS hosted at a pensions conference. Attendees were asked to compare the stories of Blockbuster and Netflix. One business failed to innovate and fell by the wayside. Whereas the other ploughed billions into digital tools and became a globally renowned content platform.
It’s worth thinking about these two businesses in the context of serving next-generation clients as the great wealth transfer gets under way.
Instant access to a multitude of services, enabled by the internet, has created an expectation that wealth management will offer a similar type of experience. This means hassle-free consolidation of pension and saving pots, the tools to switch investments in response to market opportunities and the ability to access savings in real time – online, from any device.
This is only possible with modern wealth management infrastructure.
5. As private banks contend with pressured margins, how can they best balance short-term survival with longer-term growth?
A theme is emerging. Investment in technology is a tried and tested way of overcoming margin pressures.
By improving operational efficiencies (see question 1) wealth management businesses can innovate in the short term while positioning themselves for growth in the long term.
Are you ready to learn more?
As we’ve seen, with the right strategy and tools in place, it’s possible for wealth managers to look at the three trends of OpRes, compliance and the great wealth transfer as a combined opportunity.
WealthOS will be attending the Global Wealth Management Summit and the Global WealthTech Summit on November 6 and 7. We’ll be listening with interest to the insights shared at both events.
We’d also love to hear what you think about our ideas. To meet up at either summit please email shri@wealthos.cloud.