Even as The Bahamas stakes its claim in the wealth management sector, wealth management influencers, researchers and managers speaking at a recent conference assert that wealth management firms must take a bolder stance on new technologies, or they risk being left behind. At the same time, an issue for many seasoned wealth professionals today is "defining a digital proposition that supports their business strategy but that does not expose their company to a greater cyber security threat".
Citing an ever-increasing number of "digital clients", speakers at the recent International Customer Conference, hosted by investment management software firm Objectway, said wealth managers are moving too slowly on developing a complete digital strategy that integrates multiple channels, services and delivery models.
According to analyst Ashley Globerman from research and consulting firm Celent, "Power is shifting to the client, and this trend will continue as new digital providers enter the business. Wealth management firms that are slow to respond to these changes will be at a significant disadvantage."
Jim Marous, a top market influencer and co-publisher of The Financial Brand, posited that digitally engaged high-net-worth investors are driving the wealth management industry toward greater use of digital technologies. These investors are socially active, always connected and start their investment management shopping process online. As such, they have created a market for automated advisory tools based on artificial intelligence; just the first step toward sophisticated virtual advisors that in a not-so-distant future will leverage the bigger trends growing today like Internet of Things and Big Data.
Meanwhile, Jaco Cebula, chief technology officer of Multrees Investor Services, pointed out that while wealth management firms face an ongoing challenge in terms of risk and security, technology remains a key opportunity for competitive advantage, in reference to client experience and operational benefits. Cebula said wealth managers are largely playing "catch up" in trying to define and implement a digital strategy, but in the rush to bridge that gap, there are two key areas that are critical to success.
Firstly, a digital strategy does not exist in a vacuum; it should be defined in the context of the overall business strategy, and be complementary to the more traditional channels in which wealth managers operate. Secondly, increased exposure to the Internet simultaneously increases the risk of a cyber security breach (whether cyber attacks or more subtle financial fraud).
"Security measures cannot simply be 'bolted on' after the fact, and must be included in initial design plans," he said.
According to Cebula, those working within the wealth industry should define their digital strategies in the context of how they complement overall business strategies; what channels a business is targeting and how it wants to interact with customers; how a business plans to manage and update content, and whether a business has access to the appropriate expertise to manage exposure to cyber security threats.
"Overall, technology remains a complex topic with regulation continuing to drive and shape the future of this space," he said.
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