A global Financial Services Technology leader says that “Technology is becoming a transforming agent for the financial services and wealth management industry”, and a fellow expert states that “Digital and technology should be at the heart of operation models.“
But what about financial services companies, and their customers, who aren’t yet quite ready to fully embrace technology?
There are differing points of view with regard to when or how to introduce a digital approach – either into the financial services business itself, or introducing its own customers to making use of technology in all aspects of the industry. This is where IT Managed Services can help businesses navigate the technology needed to advance.
When is the right time? The technology tightrope
An article in a financial services adviser magazine says: “If I was an adviser, as part of my clients’ annual review, I would be asking if I needed more of a technological approach, and then I would ask – how could I go about delivering that to my clients?”
For financial services businesses that have not yet actively started to meaningfully adopt technology as a way forward may find that many of their clients are already using technology in other areas of their transactions and life planning. So there may be less resistance than first thought for businesses not as willing to take the technology leap. And, also, there’s no time to waste – an annual review in this rapidly changing digital world is too long to wait for a discussion about technology.
There will always a place for one-to-one advice – either to take customers on a journey of digital transformation and how they interact with information, especially for those who are not yet ready to receive all their advice only from algorithms and robo-advisers. And there will always be customers whose personal preference is face-to-face advising.
One financial services business owner says, “Technology can help in many ways, we are doing that upfront, so our clients can fill in their ‘attitude to risk questionnaire online’, and they can complete part of their fact-find online. But we don’t insist on digital services, if it is not right for that client. I do, however think that technology is very important, but we shouldn’t force it on our clients who are not ready yet.”
But technology can set up processes – even simple starter ones like the above example – that enables businesses to hand-hold their customers through the transformation to digital that doesn’t overwhelm.
What does digital change need to do in the financial services sector?
Building trust and sound advice are cornerstones of the wealth management sector, and digital technology needs to emulate this. In an industry where knowledge, compliance, agility, security, and globalisation are all key factors for consideration.
Overcoming resistance to change
What does digital change look like when it comes to walking the client service tightrope and teetering between technology and the human touch? It turns out, there’s a place for both.
According to Juliette Peyraud’s article on the IFA website, as a financial services industry expert, she says that, “Generally speaking, new technology and automation offers the opportunity to free-up valuable time and improve productivity. In turn, businesses can offer their services at a lower cost, therefore increasing their competitiveness.”
Technology also enables financial services personnel to move out of traditional roles of solely being, say, an accountant. Increasingly, accountants wear different hats – besides traditional bookkeeping, auditing and accounting functions, clients increasingly demand bespoke business advice and assistance with long-term financial planning. This means that accountants have to know more than their client and be up to date in multiple areas. Technology will enable them to keep up to speed, and offer competitive services so that their clients don’t go elsewhere to someone who does.
Finding time to be human: Technology is part of continuous change. It brings innovation and the chance to adapt business workflows and processes to spend more time meeting clients, furthering personal relationships and developing new partnerships. Many advisers wish they had more time to get to know clients better to see where more value could be added, and technology can support this.
Overwhelming opinion suggests that FinTech will drive the new business model. These are fast-moving companies, often start-ups, focused on a particular innovative technology or process. And they have been taking on some of the most profitable elements of the financial services value chain.
In a recent Global FinTech Survey, industry respondents told us that a quarter of their business, or more, could be at risk of being lost to standalone FinTech companies within 5 years.
For traditional companies not yet adapting to the rapid changes may quickly be left behind without bringing technology platforms and software into their businesses that ride the wave of change.
Other factors to consider –
- Blockchain may become an integral part of financial institutions’ technology and operational infrastructure.
- The sharing economy: refers to decentralised asset ownership and using information technology to find efficient matches between providers and users of capital, rather than automatically turning to traditional institutions as an intermediary.
- Customer intelligence: how well do you know the value of your customer? Analytics will unlock information that can have a direct impact on your revenue and profitability
- Advances in robotics and artificial intelligence: We are already seeing alliances between leading incumbent financial services and technology companies, using robotics and AI to address key pressure points, reduce costs, and mitigate risks.
- Industry regulators will turn to technology too
- Digital becomes mainstream
- Cloud computing is fast-becoming the dominant business model
- With this comes a heightened demand for cyber security measures, and this can prove to be one of the biggest risk factors that the sector needs to work towards.
In summary, the whole operating model for financial services and wealth management sectors is rapidly shifting to IT and will be the ‘new normal.’
“Financial institutions and their IT organisations must be prepared for a world where change is constant—and where digital comes first”
Would you like to take the next step? Email financial business IT specialists ITSOL at [email protected]