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The Financial Services Industry is Undergoing its Largest Transformation in History; Are You Ready for the New Wealth Management?
For decades, the global wealth management industry has seen little, if any, changes to its comfortable business model. What worked a hundred years ago was, until recently, working today. As wealth management institutions now grapple with the most profound era of change in fifty years, and focus on transforming their businesses into digital-first enterprises, many are finding themselves playing catch-up on the technology and strategy fronts.
With Change Comes Challenge
What are these changes, and how are they shaping the way in which financial institutions are rethinking entire enterprises? Some of the greatest challenges the industry faces include:
- Financial services regulation, specifically as it impacts transparency, customer protection, and cross-border constraints to the business;
- Changing demographics of the traditional client base, with the emergence of a younger, more tech-savvy clientele with newly acquired wealth (especially by entrepreneurs);
- Ubiquitous adoption of mobile and digital technologies in all parts of daily life, coupled with high expectations for quality of experience, availability, and timeliness;
- Changing attitudes towards privacy and trust, with social platforms and digital interactions wielding an influence vastly different from the past; and
- Fintech startups that challenge traditional wealth management practices, and disrupt all aspects of the advisory model.
Traditional institutions know they must react to these shifts in thinking, and many have made at least a start along a digital journey. Some even have the scale and resources in place to edge out the competition, either with in-house developed responses or through the acquisition of startups. But in most cases, the organization itself is not set up to develop a coherent strategy, with vertically aligned business units focused solely on their own objectives and goals instead of working across the organization. For these enterprises, technology takes a back seat to that age-old business model, and propagates an all-too-common mentality: How can we fit the technology into what we currently do? This approach represents a very narrow understanding of what a robust digital strategy can do for the business. And without a clear digital agenda, this is as far as most organizations will get unless there is a serious commitment to inciting change.
Taking the First Step
Without taking the drastic step of changing the business model entirely, there is a viable, alternative approach to ensure that the business develops an appropriate and compelling digital strategy that is grounded in a practical, achievable roadmap with clear, measurable deliverables.
First and foremost: The organization needs to commit. Fully. The development of a digital strategy will only be worthwhile if it is implemented and adopted across the entire enterprise. Senior leadership plays an invaluable role in this—there needs to be a clearly designated and identifiable owner who holds the organization accountable while empowering it to fully embrace a digital strategy.
With this leadership mandate in place, identifying a digital partner is the next step to success—and where the fun begins! A thorough Service Design-led analysis of business, advisory, and client needs (and pain points) creates a carefully calibrated digital vision that will guide development. With the analysis, digital strategists can identify just the right amount of innovation, process re-engineering, and internal change needed to meet business needs. This “roadmap” is tailored to the constraints around business change as well as the organization’s budget, and recognizes factors such as inflexible business processes, fragmented independent legacy systems, a proliferation or duplication of systems, and/or significant data quality challenges that need to be solved. With this plan in place, and with an agile business partner providing high-performance engineering and delivery services, wealth management organizations can ensure that they have a unique, tailored response to the challenges shaking its business foundations.
With more than 20 years’ foundation in core engineering services and with the addition of key consulting practices covering Service Design and User Experience Design, EPAM has exactly the range of skills and global reach to help partners adopt this approach and has a track record of successful delivery of Wealth Management strategy and solutions.