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Wealth management must join the Digital Revolution

Wealth management must join the Digital Revolution

By Peter Matthews founder and CEO of

Having made their millions in tech, many of today’s high net worth individuals are asking themselves an elementary question; why are private wealth advisors stuck in ‘analogue’ mode?

With digital transformation ripping through most industries, wealth management is exposed to transformational changes on many fronts. According to a recent EY report on digital disruption in the wealth management sector, most high net worth entrepreneurs would gladly swap having a wealth relationship manager in exchange for better digital capabilities.

This should not come as a surprise to private banks. Many private wealth managers have thrived on their traditional skills and brand heritage, but most still rely on dated business models and legacy technologies – they have simply not kept up with the pace of change, and whilst the writing may be on the wall, some don’t appear to be reading it.

It’s time they did, as the Digital Revolution has now reached the professional classes. A recent competition by legal Artificial Intelligence platform LawGeex, in consultation with law professors from Stanford University, Duke University School of Law and University of Southern California, pitted 20 experienced human lawyers against an AI trained to evaluate legal contracts. They all read a series of non-disclosure agreements with deliberate loopholes included. The results showed the humans achieved an accuracy rate of 85% and the AI 95%. The humans took an average of 92 minutes to complete the task, whilst the AI took 26 seconds.

Little wonder that agile Fintechs and Silicon Valley giants are using these new technologies to cherry-pick high value services and reshape financial playing fields. If the traditional, less nimble incumbents feel they risk being stripped of their most valuable assets, they are right. And this is just the tip of the iceberg.

As the wealth management market continues to expand, four overarching trends are set to disrupt the established order. These trends will force radical changes to business models, client management and service offerings, so let’s take a closer look at them.

Generational change in lifestyle and attitude

By 2030 the generational transfer of wealth is estimated to be worth 4 trillion USD. Over the next five years, the majority of creators and inheritors of wealth will be millennials, and they have very different attitudes towards wealth and their financial advisors than their baby boomer parents.

Whilst baby boomers are relatively loyal and accepting of personal service, millennials are less loyal, less patient and some may be uneasy about their wealth and look for new ways to use it.

This next generation of clients is already demanding a new approach to wealth management. They come with their own agenda, incorporating lifestyle goals and social preferences.

In effect, this next generation will determine the future of wealth management for many years to come.

Wealth Management – crisis or opportunity?

As digital natives these NextGen clients will demand simple real-time services. They are less convinced of the value (and cost) of relationship managers and handholding advice. There will be a fundamental shift from the more traditional advice-led support to a more holistic, goal-based approach that centres around the ‘Health of your wealth’.

As such, clients will be looking for real-time data, personalised solutions, seamless digital experiences and will be happy to take personal responsibility for instant decision-making.

Yet what might appear as a crisis should be seen as an opportunity, one that requires wealth managers to change their mindset and embrace the shifting technology landscape.

 Regulatory environment – new frontiers

The regulatory environment has also been changing driven by a need for transparency and much greater compliance with complex new regulations. Wealth managers can no longer accept all the clients who approach them, or sanction some transactions. Banks need to know their clients better and be much more aware of where their clients’ money comes from and where it is sent or invested. This has created huge additional overheads for wealth managers, increasing costs and reducing margins and while it has frustrated relationship managers, it is part of the new reality.

Which brings us neatly to technology.

Technology – driving opportunities for change

As we move from legacy platforms and processes to robo-advisers and next generation digital transaction platforms, there are new opportunities for financial advisors to get in closer to their clients.

Automated solutions and “passive” investment management are gaining in popularity, evidenced by Fidelity’s first “no-cost” funds being launched in August, and diminishing the requirement for “active” human advice. This is lowering costs for clients but upping the ante for banks and fund managers. No-cost fund management is only possible if you are making margins elsewhere.

As technology, including AI and blockchain, prompts more product innovation and powers lower cost ‘passive’ products, the next generation of wealth creators will expect continuous innovation, access to new asset classes and a more ‘self-service’ relationship with their wealth manager.


Recognising the need for transformational change

So how should banks and the wealth management eco-system react to these multiple threats?

Firstly, it’s vital to recognise the transformational forces at play and the consequences of flying blindly into the future or attempting to shore up existing positions.

It is in this digital revolution context that Crédit Agricole Private Banking Services (CAPBS), a subsidiary of Indosuez Wealth Management, the global wealth management business of Crédit Agricole Group, decided to reposition itself as an independent provider of core banking technology and Business Process Outsourcing (BPO) services.

CAPBS leadership identified that all private banks and wealth managers face the same digital transformation challenge and by offering their best-of-breed, end-to-end private banking platform, S2i, as a fully managed service, either as software as a service (SaaS) or BPO, they could liberate their clients to focus on customising differentiating products and personalising front-end user experiences.

However, in order to be recognised as a transformation partner for global wealth managers, the business had to first undertake its own transformation.

Focusing on the value proposition

Taking a cue from its parent, Indosuez Wealth Management, CAPBS took the decision to redefine its value proposition, rename the business and position the new brand as an independent partner for wealth managers needing digital transformation.

Identifying a unique value proposition is key, as a recent report ‘Dare to be different’ by Oliver Wyman and Deutsche Bank revealed “that the same ‘unique’ value propositions are found across most wealth managers; a strong client focus, advisory excellence, global reach, and a broad and superior product offering.”.

Other studies have shown that wealth managers with focused value propositions and business models that are aligned to them have higher than average profit and better client engagement.

As a consequence, CAPBS’ leadership team were keen to carve out a clear and impactful value proposition. Following in-depth research with all stakeholders ’partners for tomorrow’s wealth managers’ became the foundation for a new service offering. This was designed around its core services to address the needs of digital transformation.


A new name in wealth management

This led to the creation of the new name, Azqore, which was announced in July 2018, with ‘Az’ referring to the end-to-end service offering and ‘qore’ referencing the S2i core banking platform. In March 2018, Azqore joined forces with Capgemini to launch a new technology and banking operations platform.

Azqore is protected with trade marks in key international markets and has a distinctive brand identity system, including a corporate website and an updated brand for S2i. The entire brand experience had to then be managed across the bank’s various channels

 In conclusion

There is no doubt that the wealth management sector is facing unprecedented disruption, but most industries are experiencing similar challenges. This should not however spell the demise of those traditional organisations who have relied for years on their heritage brands. Instead this should be seen as a once in a generation opportunity for re-invention.

By recognising the key factors disrupting the sector and re-positioning their businesses with the right technologies, wealth managers can focus on what they do best – guide, advise and manage their clients’ financial portfolios through the digital devolution.

Whilst millennials may challenge principles such as loyalty, their scepticism of conventional financial services offers financial advisors the opportunity to turn the table on disruptors and transform their offering to ensure their clients no longer wish to swap their expertise for Artificial Intelligence.


Peter Matthews is founder and CEO of Nucleus, an independent London-based brand, digital and IP consultancy.

A designer by training, Peter continues to personally lead strategic brand creation, innovation and transformation projects for international clients, specialising in financial services, travel and luxury. His rare combination of business, design, digital and IP expertise are highly relevant at a time of digital disruption in banking and beyond.

In financial services he led the user experience team creating First Direct’s online bank as long ago as 1996 and more recently has advised Azqore, Crédit Agricole Private Banking, Indosuez Wealth Management, HSBC, NatWest, Standard Chartered, Rothschild & Co and, most recently, a new online UK deposit bank.

These brand transformations have included: brand purpose, positioning, naming, identity and user experience, including websites and apps.

Global Banking & Finance Review


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