Innovation in Private Banking & Wealth Management
Despite all the buzz around fintech over the past few years, innovation in private banking and wealth management sectors have been slow to develop new technologies to improve their efficiency and productivity.
A recent report on the wealth management sector by Deloitte presents a few key findings in support of this view. Over the past 3 years, the number of fintech startups has tripled, but the number of private banks has declined. Although there has been innovation in banking, these have not been specific to private banking and wealth management. Also, private banks have been slow to digitise their processes.
The report also found that they are keen on exploring innovations in value-based pricing models through collaborations with fintech. Such innovations will allow clients more control and vision over their funds by accessing advanced financial data.
Fintech has made great strides in terms of digital investments, regulatory technology, payments and banking. But what about wealth management? The new wave of fintech cannot be complete without every sub-industry progressing digitally.
Private Banking Needs to Catch Up With Innovation
Every industry has realised that change is afoot. Many are scrambling to catch up with the digital age in fear of obsolescence. Changes are also happening in the wealth management and private banking sectors. Client demographics are evolving – millennials are inheriting fortunes or have struck out on their own to accumulate vast amounts of wealth, and UHNWIs are now residing in Asia (particularly China). Other financial sectors have embraced the fintech wave and have launched great efforts into developing innovation. Private banks, on the other hand, tend to be a little slower in the race for innovation.
The reputation of private banks have taken a beating recently due to instances of tax evasion and money laundering. Wealth management centres like Switzerland and Luxembourg have reported a slowdown of new international clients since 2009. Private banking and wealth management is in dire need of change.
While all the signs are pointing to the need for new technology to reinvigorate the industry, transformational change is not easy. Wealth management and private banking is a particularly traditional industry where their strengths lie in trust and intimate customer relations. This gap and necessity for change should work in tandem with the reliability established over many years.
The industry should see rapid enough changes, with many professionals eager to looki into improving innovation in areas that can be changed. Like the efficiency of client relations, the channels for communications and the diversification of product offerings are areas that can undergo transformational change without jeopardising the tradition and trust that has been built.
Collaboration Is Already Underway
We are also already starting to witness the industry partner with the fintech startup world. One such example is the case of UBS and FinChat (a Singapore based tech company), working together to develop a solution that facilitates secured social chat communication between its clients and advisors.
We believe that fintech innovation will be a great boon to the ailing financial sub-industry, if applied correctly. It will be exciting to see how private banks harness fintech or even create their own innovative solutions to remain relevant in this digital age of banking and finance.
#fintech #private banking #wealth management