Navigating the Great ‘Tech’ Transfer: Preparing Your Operating Systems for the Next Generation of Customer

Navigating The Great ‘Tech’ Transfer: Preparing your operating systems for the next generation of customer

Guy Warren, CEO ITRS

Across the world, the financial services industry is undergoing a significant shift; the world’s most affluent individuals are passing their wealth to their successors. Referred to as the ‘Great Wealth Transfer’, this process will see over $84 trillion in the US alone being transferred from the baby boomer generation to millennials and Gen Z in the next few years. As of 2020, baby boomers held 57% of all wealth and assets in the US economy, whereas by contrast, millennials owned a mere 3% – and this balance is going to shift massively in the years ahead.

How will this impact the industry?

Whilst wealth passing from one generation to another is a tale as old as time, financial advisers, wealth managers and banks will need to approach this shift in assets differently. Over the course of a generation, customer expectations have considerably evolved, meaning that millennials and Generation Z have completely different preferences to that of the generations before them, particularly when it comes to technology.

What was once an industry that was based heavily on client relationships, is no longer. Tomorrow’s wealthy want more than this; they have far higher customer service expectations – which for this generation means around the clock visibility of their assets performance, support from their manager at a moment’s notice, and the ability to ask questions without necessarily speaking to their manager in person. Put simply, a printed monthly statement may have worked five years ago, now customers, as a minimum, need a powerful mobile app.

In fact, studies suggest that 80% or more will look for a new financial advisor once their wealth has been inherited, so there is no time for the financial services sector to rest on its laurels – firms need to ensure that they are getting ahead of the game now and investing in the technologies that will allow them to ensure always-on customer care and support.

Preparing for the ‘Great Tech Transfer’

To prepare for what could be classed as the ‘Great Tech Transfer’, it’s essential to keep several things in mind when it comes to ensuring that your systems are ready for the next generation of customer:

• Downtime is not an option

Customers in these generations will adopt a no-tolerance approach to financial systems suffering from downtime, therefore it is essential that banks have bullet-proof operating systems in place. However, not only is this imperative when it comes to client service, downtime has a significant impact on the bottom line, according to ITIC, 44% of firms indicate that hourly downtime costs exceed $1 million to over $5 million, exclusive of any legal fees, fines or penalties, therefore investing in services that prevent outages is money well spent.

• Ensuring around the clock system observability

Observability will play a key role in ensuring that financial systems risks are mitigated, and that firms can learn from every disruption to help better safeguard their future operations. ‘Observability’ instead of ‘monitoring’, is the key word here.

Preparations need to be made for the unknown-unknowns instead of the known-knowns. Monitoring tells you if the system works, while observability answers the question as to why it’s not working. Achieving real-time observability of all relevant structured and unstructured data without disruption is vital – utilising technology to ensure this can dramatically reduce the time it takes to resolve faults should they occur. Added to that, the importance of early notification of faults means they can spot and correct them before they escalate.

• It’s not just the wealthy whose expectations are evolving

Whilst wealth managers may be on the front line when it comes to the wealth transfer, retail banks need to act too. It’s not just the wealthy that are demanding more when it comes to services, it’s the view of an entire generation, and therefore the industry needs to take stock and asses if their service levels are fit for purpose in the eyes of this next wave of customer.

• Reputation is of paramount importance

Lastly, the reputational cost of an outage is increasing from both the customer and regulators perspective with every fault that occurs. Customer dissatisfaction here could very quickly cost banks their long-held reputations.

To effectively confront the ‘Great Tech Transfer’, companies must ensure that they have the technology solutions in place that allow them to tackle these challenges. Not placing importance on preparing for this shift risks leaving firms unable to bridge the divide between these two generations of customer. The change in customer expectations is inevitable, but maintaining market share is not, and those that fail to prepare now, risk preparing to fail.