As a budding sector, wealth management is caught up in the perfect storm of widespread transformation: regulatory requirements are constantly evolving, digital technologies are causing immense disruption, and customers are expecting personalization and real-time engagement like never before.
With the asset and wealth management industry expected to grow by 5.6% per annum until 2025, technology opens doors to better efficiencies and performance, enabling organizations to remain relevant and competitive. Adoption of new digital technologies is sure to play a critical role in responding to change and driving growth, but how does one deal with technology adoption challenges?
When it comes to digital transformation in the wealth management sector, a staggering percentage of organizations fail at their efforts, because they consider technology to be a magic wand that will help them overcome all their challenges. In reality, when adopting technology, it is important for wealth management organizations to understand their current technology maturity level and accordingly build a clear vision and build a well-planned approach. This includes understanding their business requirements, being aware of the risks and inefficiencies, and building iterative processes and workflows that drive unmatched, long-term value.
Most wealth management organizations rely on legacy and proprietary tools and systems to carry out day-to-day operations. But these systems often end up being hurdles to successful tech adoption: their poor security and integration capabilities make them a total misfit in today’s tech landscape. At the same time, these out-of-date systems that are incompatible with emerging technologies are also expensive to maintain and difficult to upgrade. Rearchitecting, recoding, re-platforming, or simply retiring these systems is the only way wealth management organizations can leverage new and innovative tech disruptions to strengthen personal relationships and trust.
Adopting technology is not just about implementing a handful of modern systems. It requires a thorough and enterprise-wide transformation that is bursting with change: changed processes, changed mindsets, and more. Wealth management companies looking to succeed with tech adoption need to create a culture of change that includes new ways of working, adaptation of design-thinking principles, and adoption of a continuous change pipeline that allows the business to quickly and efficiently respond to fluctuating market trends.
Wealth management companies considering implementing an array of modern tech innovations often dodge adoption because of a plain lack of budget. Agreed, tech adoption can get extremely expensive, but not if the right approaches and tools are adopted. Embracing technologies like cloud and automation can play a huge role in bringing CapEx to zero while simultaneously optimizing; at the same time, they can help organizations scale their business and keep up with new innovations. They can also optimize transformation costs by partnering with tech vendors who can suggest implementing technology in key areas of the business, instead of across the business – all at one go.
Another challenge that is inextricably linked to technology for the wealth management sector, is cybersecurity. This is especially concerning because as technology gets more complex, so do the systems required to secure it. Given the fact that wealth managers deal with extremely critical and sensitive financial data, there is a widespread fear of hacking and misuse of data – which cannot be overcome by just implementing anti-virus software. Comprehensive security requires organizations to invest in modern security frameworks, tools, and techniques including encryption, end-point protection, access control, and more to ensure investor data is protected 24x7.
Dealing with disruptive forces that are plying in the wealth management industry requires organizations to rethink and revamp their previously established business models. Since there is a pressing need to strike the right balance between speed of innovation, regulatory compliance, business agility, and customer satisfaction, wealth managers need to embrace technology advancements to establish themselves as industry leaders.
But in a highly regulated industry, implementing technology comes with its own set of challenges. Being aware of these challenges is key to building the right strategies to keep pace, meet evolving customer demands, and remain competitive while successfully transforming, strengthening, and enhancing their IT foundation.
