Last week, I welcomed two renowned thought leaders to our Digital Client Engagement in Wealth Management event in London: Bijna Dasani, Head of Business Architecture from Lloyds Banking Group, and Sebastian Dovey, 2018 Wealth Management Thought Leader of the Year Winner.
The insights gained during their panel discussion were encouraging: UK wealth managers are beginning to recognize the importance of digital client engagement and the opportunities it presents.
This means that many of the industry’s business leaders are wanting to formulate their own digital strategy, and we’re seeing two distinct approaches to this emerging. One approach focuses on IT cost optimization and process efficiency when delivering products and services across existing channels (instead of creating new products). The other approach embraces a more complete digital vision, one that stimulates continuous product innovation and seeks to leverage everything that digitalization has to offer, all in the pursuit of new business opportunities.
It’s relatively easy to make a business case for efficiency, because who doesn’t want more efficiency? On the other hand, giving your business a more thorough digital makeover in order to gain greater agility understandably involves greater complexity. While these are two different aspirations that require two distinct approaches, one actually doesn’t have to exclude the other.
A more complete digital transition is worth considering, mainly because of the ongoing generational shift. After all, by 2025, Dasani highlighted that some 75% of the workforce, as well as 75% of the sector’s customer base, will be millennials. As she pointed out, not only will they have the highest inheritance on record, they’ll also be the most educated cohort ever.
Will this new generation of investors want to meet in person on a regular monthly basis with their advisors? Will tickets to Ascot, Wimbledon, or Silverstone have the desired effect on customer loyalty? Or are they likely to also expect 24/7 online access to their funds, full transparency regarding investment performance and fees, voice recognition, and all of the other customer-centric digital bells and whistles that they’re already receiving elsewhere?
Consumer-led, digital-savvy brands have already successfully entered other regulated industries. Just look at Amazon in retail, Airbnb in hospitality, and Uber in transport. Why would wealth management be any different?
Alibaba, for example, has joined the world’s largest wealth managers, with $165 billion in assets under management reported in 2017 already. “We need to take the large consumer-led brands seriously or else our customers will turn around one day and say, ‘Alipay has a solution for me,’” Dovey reasoned.
Amazon, Airbnb, and Uber demonstrate the need for greater agility across service sectors, as well as the futility of trying to capture the customer within your own “walled garden.” In today’s borderless world of shopping and peer-to-peer networks, it doesn’t matter how good your business is in itself: you need to leverage an ever-expanding ecosystem of brokers, partners, data, and technology, all of which add value to the customer journey.
For this reason, banks and wealth managers are increasingly aiming for full digitalization capability as opposed to digitally-enabled efficiency gains alone. Full digitalization capability requires them to consider the customer journey from end to end and to orchestrate people, processes, and data across business and geographic boundaries. With a digital banking platform, they’ll be able to successfully make the leap to complete digitalization.