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Wealth management firms to embrace tech and see off fintech insurgents - report

21 September 2016  |  7189 views  |  0 Team meeting with tablet

Wealth management firms are falling short of client expectations when it comes to their use of technology, but established players in the field are likely to respond well to the digital revolution and will not be displaced by fintech insurgents, new research from Roubini ThoughtLab suggests.

Technological, economic, and demographic shifts will transform the wealth management industry by 2021, unlocking tremendous global wealth, but also raising investor expectations for new advisory and digital services that some providers are not yet prepared to offer, says Roubini ThoughtLab.

Of 2000 investors across 10 markets surveyed for the report, 48% say they will switch providers if their new needs are not met. Among these new needs are more customised offerings, cited by 72% of those quizzed, greater cybersecurity, flagged by 63%, and the use of the latest technology, mentioned by 62%.

And while, wealth management firms are moving fast to adapt to the changing landscape, many are not as prepared as their clients think. For example, 63% of investors believe their providers are prepared to ensure cybersecurity, versus 48% of 500 providers surveyed for the report who say they are.

The research also shows that the digital imperative is not just from millennials and the mass affluent. Just over 40% of millennials expect to use anytime, any device access over the next five years, but 49% of Gen X and 50% of baby boomers expect to do the same. Similarly, 54% of ultra-high-net-worth investors want their investment providers to use the latest digital technology, versus 39% for the mass affluent.

But despite some concerns, Roubini ThoughtLab does not expect the established players to be disrupted from outside startups in the way that Amazon, eBay and others challenged the retail sector.

This is because firms see the threat and are acting on it. A top priority of 59% of investment providers is to build, partner or acquire fintech capabilities. And, to stay competitive, most wealth firms are developing new digital capabilities, such as 'anytime, anywhere, any device' access, omnichannel customer experiences, technology-enabled planning tools and improved performance analytics.

And in the near future, smarter technologies - such as virtual reality, artificial intelligence, web analytics, telepresence and the blockchain - will all set wealth management firms apart, predicts the report.

"The winners in this new playing field will likely be large full-service institutions, mutual funds companies, and trusted names in wealth management," says Lou Celi, CEO, Roubini ThoughtLab. "These organizations may be better equipped to meet the rising demand for specialised expertise, responsive 24x7 service, and wider investment and financial services."

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