Digital transformation is quickly becoming a necessity in all realms of finance. As such, the wealth management industry needs to adapt – but what does digital transformation mean for its customers?

The customer experience and wealth management technology are two main aspects of business that are affected and changed by digital transformation. This can have major impacts on the way wealth management providers interact with customers. The key is to understand what customers want and how to communicate clearly and effectively with them in this time of change.

In this article, we will discuss the impacts of digital transformation on wealth management, and how it will affect customer interactions in the years to come.

Understanding Your Customers and Their Preferences

Wealth management can be a tricky area in finance, as your customers and clients can vary in their wants, needs, and net worth.

As the wealth management industry grows, this only becomes more prevalent of a consideration. According to TechNavio, the wealth management market is expected to grow by more than $318 billion (USD) between 2021 – 2025, marking the increasing amount of affluent clients moving into the market.

If you are dealing with a smaller pool of very high net worth clients, communicating according to their preferences is key when introducing new technologies and services through digital transformation.

Accenture recently released a report that examines the results of their wealth management c-level survey. The report states:

– Data and analytics are enabling advisors to create personalized investment recommendations, which makes advisors more relevant and allows them to work the often-neglected bottom half of their books to further accelerate growth. Conversely, digital tools also allow firms to circumvent the advisor and bring content and ideas directly to the client, when that’s the right move for the client.”

The key is to stay connected with your clients throughout the process. In doing so, you should seek to discover their:

  • Preferred Channels of Communication: These days, there are many different ways to communicate with customers. Through digital transformation, the amount of channels of communication only increases. Discovering the channels your customers prefer is key to staying in touch and helping them feel connected to their wealth management services.
  • Acceptance of Technology: Depending on the generation and technological literacy of each customer, you will likely encounter a wide range of acceptance levels for new technologies. Some customers will be well adapted to technology, while others may desire further explanation as to why certain technologies are needed.
  • Digital Confidence: Like acceptance levels, customers will also have varying levels of digital confidence when it comes to using new technologies. A major part of understanding your customers’ communication preferences is first understanding their level of digital confidence and how you can empower them to feel in charge of their own wealth.

The Power of Personalization

One of the greatest advantages you can gain from digital transformation is the ability to personalize the wealth management experience for your customers.

When it comes to personalization for wealth management clients, it is important to understand what today’s customers are looking for. In EY’s recently released 2021 Global Wealth Research Report, the top financial goals that customers discuss and delegate to wealth managers include:

  • 51 percent of clients want to ensure adequate income and financial security.
  • 49 percent want to protect their wealth from investment loss, inflation, etc.
  • 42 percent want to diversify total wealth across different asset classes.

The technologies involved in wealth management transformations provide you with much more detailed data and insights. This information can then be used to analyze client behavior and uncover preferences they may not have even thought of.

Plus, personalization makes the communication process much smoother, as the customer is entering into interactions already feeling as though their specific needs are being met. This is especially important in wealth management, where sensitive wealth information is dealt with, and securing customer confidence is a must.

Impacts on Wealth Management Technology

To truly understand how digital transformation will impact customer interactions, it is important to look at how it will affect wealth management technology.

There are 3 key areas in which wealth management technology can be improved through transformation:

  1. Automation: Wealth has become much more distributed and widespread over the past few decades. As a result, there are more wealth management clients than ever before. Automation helps businesses handle time-consuming tasks such as risk mitigation and dealing with regulatory change. This leaves more time to be spent on innovation and communicating with customers.
  2. Customer Experience: Once upon a time, a wealth management client had to visit their provider in person to make changes to their service or even just view their accounts. With the help of digital transformation, the entire customer experience can be accessible to them through a mobile device. This helps them feel in the loop and in control of their finances.
  3. Decision Making: Thanks to personalization, digital transformation offers customers highly personalized recommendations that help them make smarter decisions. Additionally, the decision-making process is greatly simplified and available to them through their preferred channels.

Streamlining and Simplifying Communication

We’ve talked about the importance of meeting your clients’ preferences, the benefit of personalization, and how digital transformation will impact wealth management technology.

According to Business Insider, 77 percent of financial advisors in the U.S. and Canada stated they lost business due to not adopting the “appropriate tools to interact with clients as the pandemic reduced in-person meetings.”

Let’s now look at how it simplifies the actual communication process.

Digital transformation makes use of 3 key technologies that streamline communication in ways that are beneficial to both the customer and business. These technologies are:

  • Artificial Intelligence: AI has many roles to play in wealth management. It can be used to power interactive features, such as chatbots that can offer recommendations and help customers resolve issues. Alternatively, AI can also be employed to empower predictive technology to help customers make smarter and faster decisions.
  • Cloud Computing: Cloud computing centralizes information in a secure and virtual location. As a result, customers can access their information from anywhere at any time. Plus, cloud computing is a necessary enabler for larger-scale automation that makes wealth management services instantly available to customers.
  • Omnichannel Banking: Omnichannel banking is a strategy that strives to open up all channels of communication and offer the same services through each. This strategy is highly necessary for meeting the specific preferences of each client.

Final Thoughts

The time for digital transformation in wealth management is now.

When it comes to how these transformations impact customers, the benefits are clear. Not only does it optimize and streamline communication, but it also makes it far easier to provide clients with services that are personalized and tailored for their exact needs.

The key to a successful digital transformation in wealth management is to stay connected with your clients and keep them up to date on new technologies. Additionally, you should maintain a business-wide willingness to meet your clients at whatever point they may be at in their own digital journey.

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