The latest survey of our partner Orbium, Survive and Thrive to 2025 – Insights from the Wealth Management C-Suite, reveals the challenges ahead for private banking and wealth management.
In this guest blog, Ian Woodhouse, Head of Strategy and Change at Orbium, shows how the company could help wealth managers transform and enhance their future potential.
Orbium was founded in 2004 and has been an Avaloq partner ever since. Orbium has the most extensive experience with Avaloq and has been involved in most of our implementation projects worldwide. Their Wealth Management C-Level Survey 2020 reveals insights from over 50 top tier private banks and wealth managers across Europe and Asia and includes an industry outlook to 2025.
The survey provides a view of how wealth managers from across Europe and Asia plan to capitalise on these market trends and how technology could open the way for a return to the golden age of wealth management. However, there is a disconnect between what the leaders say they want to do, where they are currently and where they’re planning to invest to achieve their desired outcomes.
It's transformation time
Pressures on the industry, such as new client segments, demands and expectations, and falling margins are altering the landscape faster than ever before. Yes, cycles are short but there also needs to be a longer-term view. If firms are to manage the current cycle and seize the future potential, they would need to be more dynamic and move as fast as the market.
For many industries, digital hasn’t been a separate strategy for the past few years: it is integrated across the whole business. Wealth management has seldom been perceived as an innovative sector but now it is clearly time to change.
Many wealth managers still seem to be focused on traditional strategies to weather the industry pressures only accelerated by effects of the COVID-19 pandemic (cost-cutting etc), perhaps because they can’t yet see what future success looks like. Or they think they can set up a parallel bank on a digital platform. But the former won’t be enough, and time is short. Pressures such as rising competition and new customer demands are building, and institutions risk failing to truly unlock the value currently embedded in their legacy systems and existing client data.
Serving a new generation of wealth holders
A third of assets currently under management, on average, are at risk of leaving firms through intergenerational transfer. This demands that players re-examine their core business models to see what they can do to stop it – things like aligning their values with those of the clients (think ethical investing), offering holistic client advice and care, having the right client channels, offering a modern roster of investments that includes tokenisation and blockchain, crypto currencies and crypto investments, and confirming they have the right skills and talents for a digital world. This needs to be from the top to the bottom, from board members understanding the implications of new technologies to gain strategic advantage to relationship managers being able to better “connect” with new and different customer segments by adopting new tools to deliver richer client interactions and value.
Leveraging capabilities of an ecosystem to win new clients
Early adopters are showing encouraging results. It appears they’re holding onto a larger-than-average slice of the intergeneration wealth transfer and growing their businesses. Early adopters have realised that you don’t have to do it all on your own and have developed an ecosystem of partners. In addition, they have also invested in the right areas, including data security, talent and creating a culture that embraces emerging technologies. By putting the client at the centre of what they do, they have developed the right client experience, which includes a seamless multichannel delivery and offering ESG products and services that chime with new internal and external values.
This, taken with the survey insights, means that Orbium could help direct investment to where it needs to go so that wealth managers can be more dynamic by transforming in a structured way that brings their legacy together with the new to fully enhance their future potential.
To find out more and to download your copy of the full report, visit https://www.orbium.com/c-level-survey/