Wealth managers and financial services companies in general need to prioritize and redefine what can be expected and achieved from digitization, according to fintech firm Nucoro.
The firm estimates that more than £20 billion ($1.23 billion) of high-net-worth individuals’ investable wealth could be passed on to their loved ones every year, but as many as 80 percent of wealth managers don’t have an existing relationship with these beneficiaries, who are often millennials who do make use of technology in all aspects of their lives, including managing their money.
Nucoro estimated approximately 84 percent of companies fail at digitization projects. The digitization of the wealth management sector needs to go beyond simply moving physical into digital and fundamentally rethink products from the conceptual to execution.
The report said that this is being driven by the rise of automation facilitating scalable growth, and the transformation of customers where their expectations, needs, behaviors and demographics are changing.
Nikolai Hack, the COO and U.K. managing director of Nucoro, said, “As with any investment in a financial business, a central motivation should be to ultimately produce outcomes that can benefit customers. Adopting bolt-on enhancements like digital customer experiences or automations for back-office functions are the best routes to upgrading the services to existing and potential clients due to their accessibility, scalability and affordability.
“Wealth managers must embrace technology. The industry is heavily regulated, and it therefore faces a large administrative burden, but technology can minimize the time and resources spent on tasks that are very basic but high in volume.”
The report found it is now realistic to consider direct to consumer robo-platforms as legitimate industry challengers. By the end of 2018, they were managing $257 billion, and this could grow to $1.26 trillion by 2023.