Syntel, Inc. (Nasdaq:SYNT), a global provider of digital modernidation, information technology and knowledge process services, advises that the wealth management industry needs to adopt automation in order to provide services that align with the emerging digital influence on the financial services sector.
In April 2017, the U.S. Department of Labor is expected to enact its ruling to designate investment advisors as fiduciaries under the Employee Retirement Income Security Act (ERISA). While it remains to be seen what final form this rule will take, it may affect the growing trend of robo-advisors, because financial advice based on processes rather than human intervention is theoretically identical for all clients and free of conflicts.
Robo-advisors and other emerging technologies are shaping the future of wealth management interactions, with automated, AI-based systems that give non-biased advice which minimizes the risk of questionable sales practices or conflicts of interest.
However, like most players in the financial services sector, wealth management firms are struggling to implement these sort of modern services due to a heavy reliance on legacy systems. Without the right means to balance both modern and legacy technology, wealth management firms could miss out on the benefits of integrating digital technology, which has become the key to attracting millennial consumers.
A recent study by PwC found that 47 percent of High Net Worth Individuals under age 45 who do not currently use robo-advisors would consider using them in the future.
According to Nitin Rakesh, CEO and President of Syntel, "The rise of new technologies has altered the financial services industry and the speed with which digital natives expect to receive services. Trends such as robo-advisors in the wealth management industry are moving interactions to the digital channel, delivering customized advice anytime, anywhere, without bias."
"Major financial services firms have long viewed Fintech as a challenge to their market share," said Rakesh. "However, there is a more collaborative paradigm emerging, with large financial institutions looking to partner with FinTech companies to integrate new digital solutions with their traditional offline services."
However, to reap the benefits of such new advances in tech, wealth management firms need to implement solutions that will enable them to operate their business with greater efficiency, while bringing innovative new products and services to market faster.
Rakesh asserts that the best course of action for firms struggling with outdated legacy systems is to seek out technology partners that can help them modernize by implementing intelligent automation for their back-office processes. The ultimate goal of such an effort is to become more agile and free up funds to invest in innovative front-office services.
Mr. Rakesh's company, global IT and business solutions provider Syntel, offers a suite of digital modernization solutions that reduce the run the business cost and provide the efficiency and agility to increase speed to market and pave the way to provide innovative change the business solutions.
"A convergence of the strong distribution channels and funds that wealth management firms have, with the latest front-end digital services offered by FinTech firms can provide a glide path to growth and stability for the sector," said Rakesh.