The Digital Future of Wealth Management is Bright

By: Kevin Dinino

This post was also published on FinTECHTalents

Prompted by smartphones, fast Wi-Fi and more recently, the COVID-19 pandemic, financial services companies are offering tailored experiences to fit the needs and interests of their target personas. Consumers expect a highly customized digital experience and wealth management is no exception. Over the last decade, wealth management has evolved from a product-centric industry geared towards the high net-worth demographic to a customer-focused model that encapsulates everyone from a self-directed investor to those that fancy themselves a family office setting and feel. This expansion has spawned a need for new and emerging technology to aid in creating personalized customer experiences and investment solutions.

As companies receive access to a wealth of information, hyper-personalization represents an opportunity to proactively present a value proposition that makes customers feel understood. This now industry-accepted strategy can see significant gains, with Boston Consulting Group estimating that successful personalization at scale could represent an increase of 10 percent in a bank’s annual revenue.

Today, the advancement of artificial intelligence and data analytics, wealth management companies are creating highly personalized experiences that celebrate the differences of a broad range of customers, meeting their lifestyle banking needs, increasing customer satisfaction, loyalty, and activity. The effectiveness of this method was demonstrated in a 2016 Accenture report which reported that 40 percent of customers would remain loyal to their banking provider if they offered more personalized service.

AI Advancements

Omnichannel personalization through artificial intelligence (“AI”) can be used to improve bank-customer communication and the overall consumer experience by enhancing existing systems and adding value to a company’s proposition.

According to a 2019 study by research group Forrester, about fifty percent of financial services companies were already leveraging AI services. From using it to automate menial tasks, analyze data, improve customer service, and comply with regulations, AI is just beginning to scratch the surface of its potential in the wealth management industry.

JP Morgan Chase uses AI for fraud detection, virtual assistants for customer inquiries to “sentiment analysis”, which measures how positive or negative an analyst is about a company stock. Trezeo’s AI is used to tailor services to customers’ needs. The company uses AI to analyze gig economy workers’ income and outgoings to help them manage their finances. The company’s AI technology understands gig economy workers have income trends that vary and automatically saves extra income during busy months to recoup for slower months.

Advanced Data Analytics for Hyper-personalization

Having access to large amounts of important data on customers can make it difficult for wealth management institutions to know where to get started or what areas to focus on to create an enjoyable tailored customer experience. Fortunately, new technology is making it easier to have a clear understanding and set a plan based on complex data sets.

Raul Rodriquez, Managing Director, Innovation Accelerator at Charles Schwab and FTT North America panelist agrees, stating, “While many financial goals are nearly universal (“I want enough wealth to be secure in retirement”), clients’ wealth management decisions are sensitive and unique. Personalized digital experiences are most powerful when clients sense us tangibly responding to their specific financial situations, even as they rapidly evolve. In particular, experiences that enhance trust and familiarity amid complex or intimidating financial decisions are highly valued by clients. In our present environment, digital personalization also allows Schwab to maintain a deep connection to our clients, many of whom may be concerned about a less predictable future.”

Another advantage that has been forged from the advancement of data management technology is the optimization of existing data through the integration of new sources of information to better understand clients’ current needs and even predict their future ones. Many banks have partnered with Canadian startup Flybits, which builds personalization solutions with contextual intelligence. Through a combination of data, content, and context, Flybits enables finance providers to better segment customers and better understand them. Additionally, these insights can then be funneled into digital experiences with highly engaging content and recommendations for each of them.

Our approach at Goldman Sachs Personal Financial Management is to first center our attention what the client values. Our FinLife platform uses behavioral finance tools to help the advisor understand what is important to each individual. It also helps our advisors use digital tools to manage their clients. This gives us a deeply personal understanding of what each client needs, and helps us build the foundation of financial plans and investment strategies so they can live their one best financial lives, says Rachel Schnoll, Managing Director and Head of FinLife at Goldman Sachs. 

Whether executing a series of stock trades to rebalance a portfolio or to plan for retirement over the next fifteen years, the benefits of artificial intelligence and advance data analytics are unmeasurable. The new customer expectations created by today’s digital transformation will continue to bring hyper-personalization technology to the forefront of innovation and reap extensive benefits for both the consumer and the provider.

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