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Trends in Wealth Tech – Highlights from our Wealth Management Event April 2019

Trust is key in innovation and in Wealth Management

Trust. It’s an essential concept within Financial Services and Wealth Management in particular. Trust is about showing you act with integrity and are able to serve the client’s interests in the best way possible. By applying smart technology, you can increase confidence in both. The contradiction with trust when it comes to new technologies, however, is that trust often works against the adoption of new innovations. This is mainly due to the fact that customer trust in banking, traditionally, has been built through personal contact with a private banker or wealth manager around tailored products. This trust paradigm is not yet something that technology can offer - yet. However, we are now at a point where technology can be used to better customize client services and to offer specific personalized products to clients that can help to build increased trust.

It is time for a balancing act in the market. As new technologies can both enhance traditional business models and create new business models, it is no longer an ‘all-or-nothing’ situation when it comes to applying Wealth Tech. The result is a clear movement in the market to hybrid business models. Large wealth management firms in the U.S. such as Schwab and Bank of America Merrill Lynch (BAML) are moving from “high touch human” to more digital and tech-enabled experiences. On the other hand, robo-advisors like Betterment are a good example of the opposite trend, Betterment as a formerly digital-only robo-advisor initially served customers completely digitally. However, over time, they discovered that personal contact can improve the customer experience in certain cases and therefore, established a customer service call center with human operators. The call centers showed that customers preferred to perform simple tasks without human interference but to be able to reach out to the call centers when questions or actions become complicated.

Drivers of Wealth Tech – Technology and People


What drives the current state of Wealth Tech taking supply and demand into consideration? On the one hand the technology and on the other hand the stakeholders. In terms of technology, there is no longer linear growth but rather exponential growth. The changes are going so fast that almost anything is possible and failure to use new technologies is no longer an option. As customers base their expectations of Wealth Managers on customer experience benchmarks being set by other industries such as retail and B2B Tech companies - think Uber,, Coolblue, and Google - convenience is the new loyalty, and new technologies make it easier than ever to switch between providers.


The most important stakeholders longing for innovations within Wealth Management are customers, employees and asset managers. Customers actively seek and demand new methods and techniques, where convenience is key. In addition to convenience, customers ask for trust, independence and personalized services and products. Research by McKinsey (Key trends in digital wealth management, 2016) has shown that customers of new digital entrants have a 5-10 times higher client satisfaction than customers of traditional asset managers.

For employees, it is still hard to draw a firm conclusion. Some embrace innovation and new technologies while others are being threatened by it. Most importantly, for a successful implementation and adoption, it is key for employees to understand how the new technology benefits them.

Finally, the huge growth in Wealth Tech investment speaks for itself. Asset managers are using smart technology to get a better overview of their data and performance metrics. Scalability can also be increased using smart technologies which in turn leads to a better cost/income ratio. In addition, it can offer opportunities for better risk management and can serve to reduce the number of operational errors.

Today is the right time to invest in Wealth Tech

In conclusion, both the technology and its users are ready for innovation in Wealth Management. The time to innovate with Wealth Tech is now. To make the investment a success, it is important to understand your clients and your employees and to include them in your digitization journey. Both the rational and the irrational (emotional) aspects are important at this stage. At the basis of it all should be a clear digital strategy with a digital growth model where customers and employees are guided through the change, step by step.


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