How Technology Is Reshaping Wealth Management

Technology, like art, is a soaring exercise of the human imagination being implemented at every step in our daily life

Today technology is reshaping the way of wealth management — from tools which provide financial advice to the kind of advice itself.  Individuals and business need to be ambitious and entrepreneurial in implementing these technologies.

The Wealth Management industry today is evolving, and its growth and size (As per a report by Ernst & Young, the wealth management industry is at nearly USD 55,000 billion and is estimated to reach USD 70,000 billion by 2021) make it engaging for investors.

As per the statistics, the Wealth Management industry in India is estimated at nearly INR 100 lakh crore (USD 1.5 trillion) and is expected to double in the next five years, measuring high growth rates. This force is driving Wealth Management players to modify their business strategies, operating models, product and services, and even technology, to stay compatible and compete with FinTech-enabled organisations, shifting customer expectations, and new regulatory regimes.

Numerous wealth management experts are focused on addressing key client lifecycle challenges, the consequences of which have been obstinate and expensive over the years. Today, the wealth management industry is encountering challenges across multiple domains including safe navigation through complex regulatory requirements, creation of customised pitches to clients, prospect identification,  clear and insightful client reporting, and improving the hit rate of product pitches without infringing on regulations around the suitability of investments.

The scenario for wealth management enterprises is now open with the onset of transformative digital technologies to get past these challenges with solutions that could result in building a positive customer response and experience, magnified productivity, enhanced compliance, and lesser cost.

Innovative Technology to the Rescue

Constant evolution in technology is going on, with solutions that are innovative and are augmenting the growth of the wealth management industry.  Wealth Managers are seeking to create more efficient operations and improved customer satisfaction by applying contemporary technology.

Technologies like Virtual Reality (VR) and Artificial Intelligence (AI) are reshaping the wealth management industry, both on the back-end and front-end, by opening new boulevards leading to an increase in efficiency.

Two primary technologies are changing the way the wealth management industry functions are Natural Language Processing (NLP) and Optical Character Recognition (OCR).  

Natural Language Processing (NLP) is being used to achieve an enhanced client experience.  Integration of NLP and OCR is enabling wealth management players to give a frictionless customer experience. NLP can further be utilised to onboard and collect Know Your Customers (KYC) information, gather sentiment analysis for the selection of stocks, provide customer support, and create a knowledge-base for advisors.

Using a combination of OCR and NLP to assess provides a seamless user experience by processing both structured and unstructured documents, consequently avoiding restricting deception of efforts, a notable improvement of onboarding times, and a decrease in the manual effort needed to collect and validate documentation.

Predictive Analysis for Wealth Managers

Over the years, the wealth management industry has moved towards a more comprehensive approach with investment managers implementing techniques like predictive analysis as an early warning system for asset risk or to generate investment ideas. Asset managers, hence are able to predict demand, anticipate and manage investors or asset depreciation, foresee life events and bring out the best opportunities for financial investment.

The predictive analysis enables wealth managers to have better clarity and understanding into their domain of business, along with a complete view across the company. It facilitates transparency, intelligence, and benchmarking apart from improving business economics by identifying and rectifying hidden pricing inabilities. Moreover, it aids in the creation, customisable, and interactive diagrams for better decision-making.

The Journey of Virtual Reality (VR)

Today many wealth managers and investors are facing a major challenge of the continuous advisory experience focusing on communicating investment returns rather than engaging with wealth managers and investors.

Wealth managers can connect with their end-user by creating a VR-simulated journey with the help of the ‘client’s financial journey based on financial summaries, goals, and risk analysis. Moreover, VR’s focus on making the investment experience exciting and thus ensuring that the investors experience the advantages of investing with an advisor

The gripping storytelling method and enthralling experience that VR provides enhances the user experience and promotes higher client engagement.  Integrated analytics and ease of navigation through the prevailing holdings helps calculate a precise order of end goals.

Blockchain for Client Book Building

The ever-dependable and a robust blockchain network are being applied increasingly today by wealth managers to create smart contracts– computer contracts designed to digitally aid, verify, or implement the negotiation or performance of a contract allowing wealth managers to monitor the client book actively.

Blockchain as a technology is extremely flexible and can develop frictionless procedures that could be implemented at several points in the user’s lifecycle including client onboarding, faster clearance, settlement of trades, and model portfolio management to ease compliance and regulatory difficulties linked with KYC and Anti-money Laundering (AML).

The Step Ahead

Today, wealth managers are facing severe challenges. These consist of an increasingly complicated line-up of products for the increase in the number of advanced and well-informed investors. Rising customer expectations, rising demand for self-service and swelling competition powered by robot-advisor explications which are engaging millennials and high-net-worth (HNWs) customers alike are building a challenging environment.

Gamification, Augmented Reality (AR), and VR is creating possibilities for aggressive instructive training programs and enthralling goals-based planning scenarios. Gaining on these trends and technological advancements are positively impacting the business and are assisting them to remain appropriate and competitive.