4 Digital Technologies Transforming Wealth Management in '24

While the customer needs change in the wealth management sector, the adoption of digital technologies has remained slow. A new generation of customers are now joining the market, and their needs are influenced by new technologies. Wealth managers need to provide faster and more convenient services with a digital experience in a more volatile and uncertain environment created by the Covid-19 pandemic. 

McKinsey states that wealth management firms can not overcome these challenges without digital transformation.

This article explores 4 key digital technologies transforming the wealth management sector.

1. Advanced Analytics, AI, and ML in wealth management

Better customer relationship management: Customers now require more personalized services and according to the survey, 71% of respondents are willing to share more personal information with their wealth managers to achieve this personalization. Wealth managers and advisors should focus on reducing the disconnects between their clients to better understand them. For this, they can focus on client priorities, provide holistic advice regarding hot investment opportunities, and connect more with the new generation of clients.  AI driven wealth management chatbots can automate customer services and provide investment tips to clients.

Wealth managers can also leverage advanced analytics to use personal data and provide a more tailored service to their clients. Advanced analytics, enabled with AI (Artificial Intelligence) and ML (Machine Learning), can transform this data into insights for customers. AI-enabled wealth management software provides these insights through interactive dashboards.

Better portfolio management: ML-enabled tools can integrate novel and unique data sources to help clients make optimal investment decisions. ML can also automatically create financial reports for better decision-making. However, as shown in Figure 1, even though AI and ML have immense implications in portfolio management, the usage of AI is only 6%. Therefore, wealth managers should invest more in understanding the implications of these trending technologies and how they can be integrated with their business model.

Figure 1. Global Usage of AI for portfolio management in 2020

Watch the video below to learn more about how AI can improve wealth management

2. Intelligent automation in wealth management

Avoiding pushback from automation technology: Automation technology can sometimes threaten employees to lose their jobs which results in pushbacks towards adoption. Therefore wealth management firms should incorporate the employees during the implementation process and provide them adequate training to eliminate the hesitation. 

Improved Mergers and Acquisitions (M&A) in wealth management: M&A deals are rapidly rising in the asset and wealth management sector. RPA (Robotics process automation) can significantly quicken the time-consuming process of migrating investor data during M&As. In addition, during the onboarding of new clients, transferring data to the new system can be automated, and if there is any discrepancy in the data, RPA can detect it and alert an employee for further inspections.

Improve compliance in wealth management: Predictive analytics and intelligent automation can save time and improve efficiency and accuracy in asset management compliance. 

Digital documentation: OCR (Optical character recognition) and ICR (intelligent character recognition) can be used for error-free and quick identification and transfer of data from paper to digital systems.

3. Cloud computing in wealth management

More flexibility: Cloud applications can allow more flexibility and scalability according to the size of the asset data and the number of clients being managed.

Cost reduction: Through tailored subscription options offered by cloud applications, wealth management firms can choose the most suitable SaaS (Software-as-a-Service) according to their business needs. Cloud storage systems can also help save companies from heavy investments in data storage hardware. 

More security: Cloud-based storage platforms provide more security for wealth managers to safeguard their confidential financial data against breaches.

Better compliance: Cloud accounting software can provide better tracking of documents for auditing processes in wealth management. Figure 2 illustrates the forecasted market size of cloud-based accounting software from 2018 to 2026.

Figure 2. Global Cloud-based accounting software market size forecast from 2018 to 2020

4. The future of wealth management with blockchain

According to Deloitte, blockchain technology can have many potential benefits, including improved transparency, security, and reduced costs, for the wealth management sector. 

Secure and unaltered data: Wealth management firms can store copies of reference data on blockchain systems that can not be altered. In addition, companies can separate the internal and external blockchain systems to maintain confidentiality. Since unauthorized users can not access blockchain systems, security threats can also be reduced.

Client book building: Smart contracts can monitor client books and inform clients and their financial advisors of any alterations, such as changes in asset allocation. 

Reduced costs: Privacy protection of data and KYC could be made cheaper and more accessible through smart contracts. As a result, wealth managers can have more reliable interactions with clients and improve client relations.

Further reading

• Digital Transformation Case Studies and Success Stories
• Top 7 Digital Transformation Best Practices for the Organizations
• Top 10 Technologies Enabling Finance Digital Transformation

You can also check our sortable/filterable list of digital transformation consulting companies. If you have more questions about digital transformation in wealth management, let us know: