Sink or Swim: Why Wealth management Can’t Afford to Miss the Digital Wave

Milan Ganatra

The COVID-19 pandemic accelerated the churn we were already witnessing in the wealth management industry. The pandemic prompted aggressive digitisation as communication and services were forced to adapt in order to reach out to people. For the wealth management industry, it has created an interesting situation. Like many other financial services industries, it has seen an uneven adoption of digitisation. While most players have adopted a certain level of automation in front-end services, the back-end is more of a mixed bag, mired in regulations, lack of digital products, or a general reluctance to completely digitise.

But as new players emerge to redefine the terms, the wealth management industry can no longer afford to ignore the sweeping digitalisation of all our spaces. As we stand poised on a transitional phase, this could be the sink or swim moment for the industry.

  • Why we can’t ignore digitisation

The first question to ask ourselves is whether we can continue with partial or no digitisation? It is now becoming increasingly obvious that this option can no longer apply. Even traditional wealth management firms were forced to go digital to connect with their customers. More importantly, certain financial products like PMS, and fixed deposits are now exclusively digital. Hence, at least a level of partial digitisation is the norm across the industry.

The biggest argument for adopting digital services is the changing nature of the investor. The industry is seeing a shift in demographics with millennials now placed at decision-making demographic with Gen-Z following closely. In addition, we are also seeing more women investors. With the influx of this new generation of investors has come a certain shift in services and perceptions. This generation is more comfortable with tech-enabled services and more willing to change shops if their expectations are not met. We have to keep in mind that this is digital-native generation that not only prefers, but expects an online presence. They want personalisation with 24/7 access to their portfolio as well as decision making tools and executions

Although India has been leading the digitisation of our financial spaces with the fastest adoption of fintechs in the world, the fact is that we may now be hitting a wall when it comes to our offerings. Our product manufacturers who were quick to adopt technology when it came to customer interactions or products like bonds or deposits, have been markedly slow in the incorporation of automation for many products, especially in Alternative Investment Funds, and non-mutual funds products There is still an element of human intervention and the use of physical form of assets. Consequently, we are limited by our outreach towards investors and the investment bouquet we can offer. Given that these are substantial and high-value investment products, we may be looking at losing out at a large slice of the pie, especially with the millennial generation. It is perhaps the ideal time to take the lead in changing this scenario.

  • Why we should adopt digitisation

The urgent need for digitisation does not come from the fear of missing out on potential investors alone. Its benefits far outweigh the consequences of its absence. The fact is that digitisation has helped us significantly in improving our services and making them more secure in multiple ways. The digital-driven improvement in services has been multidimensional, creating more personalised and efficient front-end services, while providing us with sharper consumer insight.

The cutting edge tech-solutions in wealth management today come from AI/ML solutions. These tools are used for data analytics to cull a deeper insight into investors, their income, spending patterns, priorities, and liabilities. These can create an impartial and more precise investor profile that is deeply based on data. On the other end of the spectrum, they are more capable of tracking asset performance of different manufacturers. This has also helped us to up our game in the delivery of services. Today a digital wealth manager is more personalised, able to create a precise profile, and deliver at lightning-fast speed.

Also Read: Business Growth in the BFSI Sector is Driven by Improved Digital Customer Experience

It can also address the thorny issue of data security. While financial companies do need to work on tightening their data security structure, the fact is that digital securities are actually far more secure because they are almost indestructible. Unlike physical assets, these cannot be destroyed by fire, earthquake, or any natural and man-made disaster. This also helps us to improve our record-keeping and tracking. A digital personal portfolio keeps track of investments, minimising any chances of loss.

India has been leading the global front when it comes to fintech, showing a willingness and capability to adopt technology. But we are still at the tip of the iceberg. While new firms like Groww, Zerodha, and Smallcase are racing ahead, we need a wider digitalisation of both our services and products. More automation will create a far wider access and help us reach out to the emerging demographic of investors who will soon have the largest share of incomes and assets. At the same time, tech-based technology will become critical in analysing data and improving customer services. Hence, when it comes to adopting digitisation, the wealth management industry can either sink or swim. In fact, the more tech-savvy it gets, the more likely it is to race ahead.

Views expressed in this article are the personal opinion of Milan Ganatra, CEO & Co-founder, 1SilverBullet.

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