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Jamie Ponting
Transformation Leader in Financial Services
Clients want every interaction with a financial services firm to be tailored specifically to their needs. To meet this demand effectively, increased utilisation of software and fintech solutions is essential.
According to a Gartner report, software spending by wealth management firms is projected to increase by 11.5% in 2022, reaching £149 billion. What do you believe are the main factors influencing this significant increase in spending within the sector?
From my perspective, there are two primary factors at play. Firstly, clients are increasingly demanding highly personalised services. They want every interaction with a financial services firm to be tailored specifically to their needs. To meet this demand effectively, increased utilisation of software and fintech solutions is essential. Secondly, regulatory and margin pressures are contributing to the rise in software spending. The Financial Conduct Authority (FCA) in the UK, for example, emphasises cost over value, driving firms to scrutinise and optimise the costs associated with their services. This puts downward pressure on margins. By adopting technology, firms can enhance efficiency and operate at a larger scale, helping to ease these cost and margin concerns.
It's interesting to see how client behaviours have evolved in the wealth management market. How would you characterise this shift?
The key change in client behaviour is their desire for a hyper-personalised experience. They no longer settle for a standardised process that treats them as just another customer. They want a process that understands their unique circumstances and considers various factors related to their finances. This shift towards personalised service is expected to continue and intensify, not only in the coming years but also beyond 2025 and 2030. Clients want to perceive that they are receiving a tailored experience, even if it may not be entirely unique from the service provider's perspective. The perception of a hyper-personalised service is crucial. Additionally, as younger clients enter the industry, this need for customisation and individualisation will only grow stronger, which is significant given the intergenerational wealth transfer which is going to happen in the coming decades.
According to Deloitte, 40% of wealth management clients now say that digital access has greater importance in decision-making, and three quarters of wealth firms believe that the primary engagement channel for investors will be digital within two years. McKinsey also reports that 50% of high net worth clients feel their wealth managers should improve digital capabilities across the board. Do you agree with these findings?
Absolutely. It's widely accepted that wealth managers need to improve their digital capabilities. In fact, I'm somewhat surprised that only 50% of clients feel this way. The financial services industry in the UK, in particular, is known for its outdated systems and solutions, presenting a significant opportunity for new market entrants to enhance digital channels and client experiences. However, the level of digital access and capability needed depends on the complexity of the service and the specific needs of clients and there will always need to be, in my opinion, the ability for a hybrid approach, where face-to-face interactions will remain a key component of any wealth management service.
Could you elaborate on the client processes that should be moved online or digitally transformed?
Certainly. Basic tasks like opening bank accounts, initiating transfers, or making pension contributions are now expected to be handled digitally, with almost instant processing through an app or online platform. These everyday transactions are where digital engagement is becoming the norm. However, there are two factors to consider. Firstly, the age demographic of clients plays a role, as older individuals tend to be more cautious and less digitally native. Overcoming this hurdle for less tech-savvy or elderly clients remains a challenge. Secondly, as the complexity of client needs grows, particularly in managing larger or more complex wealth portfolios, including intricate tax strategies, or diverse investment funds, there is still a strong preference for face-to-face interactions and personalised support from wealth managers.
Basic tasks like opening bank accounts, initiating transfers, or making pension contributions are now expected to be handled digitally, with almost instant processing through an app or online platform.
The demand for integrated banking and wealth management services will continue to grow, driven by clients' desire for convenience and the ability to access all their financial information in one place.
Another significant trend in the wealth management industry is the demand for integrated banking and wealth management services. How do you see this trend evolving, and what potential partnerships or collaborations do you foresee?
The demand for integrated banking and wealth management services will continue to grow, driven by clients' desire for convenience and the ability to access all their financial information in one place. Clients want a unified view of their finances, including their bank accounts, investments, mortgages, and loans. Open banking initiatives are making this integration more feasible by allowing different financial service providers to securely share data with client consent. In terms of partnerships and collaborations, we can expect to see more alliances between banks, wealth management firms, and fintech companies. These collaborations will allow firms specialising in different areas to pool their resources and expertise, creating seamless and comprehensive solutions for clients.
About Jamie Ponting
Jamie Ponting was previously Head of Division, Strategy & Change for a FTSE 100 Wealth Management company, responsible for the advice process, including technology design and developing Robotic Process Automation (RPA) and Artificial Intelligence (AI). Now a co-founder of Adeptli, a consultancy firm for financial advisors and financial services firms, focusing on providing guidance on advisory practices and technology utilisation and implementation.
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