New Digital Banking
New technology and capabilities that were accelerated through the COVID-19 pandemic have further disrupted banking, including the hitherto slow-moving wealth management business. Image Credit: Supplied

It would be a strong, yet a fair, claim to make that banks have had to change their business models more than any other industry.

New technology and capabilities that were accelerated through the COVID-19 pandemic have further disrupted banking, including the hitherto slow-moving wealth management business. But with change comes caution and fear - so it still remains key for banks to maintain the human, trusted side of advising on wealth.

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The question is whether financial institutions will remain committed to the new models that evolved during the crisis?

The pandemic has required changes in behaviour from both clients and their advisors – and placed greater emphasis on digital solutions enabling remote engagement rather than face to face. No longer can digital projects be postponed. Medium- to long-term plans have been re-evaluated to meet the current needs of clients.

Wealth managers need to look through the cycle to manage what the uncertain future will look like. Clients expect tailor-made services suited to their individual needs, whether its easily accessible financial management platforms or face-to-face meetings.

space for a hybrid model

The adoption rate for digital wealth management solutions has increased dramatically. Standard Chartered launched a mobile fixed-income platform in select African markets at the beginning of 2020. By July, up to 50 per cent of fixed income transactions were completed using the app.

The diversification of digital product offerings in investments has given clients the option to choose where to invest based on market volatility during the COVID-19 situation. However, customers still care for an experienced professional who will explain the strategies proposed by the systems, while offering support in the decision-making.

The classic, relationship-driven business model with its communication channels such as telephone, email, and face-to-face meetings will not become obsolete. But there will be a shift from personal interaction to digitally enabled client interactions via intelligent solutions and social media.

We are now moving toward a hybrid model of people and technology. Whilst there is a place for automated services, we believe customers still appreciate banking with a human element, offering the personal touch and creating strong relationships. Clients can engage with relationship managers and complete investment transactions at a time, place and channel where it is convenient for them.

Fast-track to digital

Increased digital capabilities has given clients greater flexibility to choose where to invest. In June alone, product sales rose to an all-time high as a result of the increased accessibility through digital channels. The bank has seen a 65 per cent digital adoption in online mutual funds throughout our African markets.

Diversification of digital products offering can extend beyond helping clients to grow their wealth to also enabling clients to protect their wealth.

A balancing

Based on current trends, the wealth management provider model will need a refocus, with divides between people and machines fading. As client needs shift, services and interactions will evolve in multiple ways. For years, wealth management advice meant a client paired with a dedicated human advisor.

More recently, as algorithms have become today’s trending topic, many have chosen the technology-only route, citing the lower cost and round-the-clock access it provides. However, for clients that have material assets to invest, neither alone constitutes the future of wealth management.

It is becoming more apparent that firms that can provide an automated platform with periodic access to a human advisor rank as the most preferred scenario across a range of investor profiles, combining the best of both worlds. Customers have the ability to discuss investment and life insurance needs, review their portfolios and receive guidance on personal investment plans, execute investment and life insurance transactions, as well as updating or creating a ‘Customer Investment Profile’ via an app.

Can’t have laxity

Wealth managers have been quick to adapt, making tough decisions like never before, yet clients should take more comfort in knowing they are supported by dynamic individuals and cutting-edge technology. There will always be a balancing act for wealth management between the importance of 24x7 access to information digitally, along with the role of human interaction which reinforces trust, especially during times when people have doubts for the future.

The biggest learning is that banks and wealth management have shown not only capabilities to adapt but shown the willingness, which will only benefit the industry and clients for the long-term future.

- Dr. Owen Young is Regional Head of Wealth Management, Europe, Middle East and Africa, Standard Chartered Bank.