6 implication areas in digital strategy Asian wealth managers should bear in mind

Wealth management companies, like those in many other industries experiencing digital disruption, need to adapt quickly and pragmatically to determine their digital strategy.

Nowhere more important will this play out than Asia Pacific which now makes up two thirds of the world’s middle class of emerging consumers . They need to balance the increasingly sophisticated needs of the digital investor with the cost and complexity of execution, all within the constraints of a highly regulated, cross-border financial environment.

Some of the major implication areas to be considered in such strategies are:

1. Investment Categories
A typical investor will be balancing a range of investments across a range of asset classes, each with different management requirements - from super funds whose management approach is less day-to-day through to the higher involvement equity transactions, and high frequency trading and derivatives trading.

In order to manage a complex heterogeneous portfolio, investors require access to information that is accurate, highly relevant and on the right time scale in the context of each class of investment.

2. Regulation
The regulatory environment globally is complex and whilst efforts are being made to make the regulations more uniform, their obligations must be satisfied regardless of the channel used for wealth management.

Despite this complexity, digital investors assume that regulatory requirements are being managed for them, either by their wealth manager or through the digital channels they use to invest. In fact, digital channels provide a huge opportunity for regulatory compliance since all interactions and investment activity can be monitored, stored and reported to the relevant authorities - provided the platforms used keep up to date with compliance requirements.

By working with compliance technologies, wealth managers can actively support regulatory adherence on behalf of their clients, and reduce their own compliance risk for both foreign and domestic investments.

3. Collaborative Expert Advice
The modern investor requires a range of information services and advice and will aim to minimise face-to-face, time consuming interactions where possible. Wealth managers must continue to manage their customer relationships, or risk losing their business.

However, wealth managers must also manage the cost of customer contacts on their various channels. The effective use of channels such as online investment reports, video advice, email and social feeds allows them to build the relationship with their customers in an economically sustainable manner.

4. Visualisation
With the complexity and diversification of investment options continuing to increase, the need for investors to be able to access and visualise their entire portfolio in an easy-to-digest format has never been greater.

Investors ideally wish to see all their investments in one place, and then to be able to drill into specific investment categories and decision making options that are tailored both to them and to the nature of the investment. This also allows them more easily to manage their investments, risk profile, total financial exposure, tax reporting and regulatory compliance.

5. Predictive Data Analysis
Digital channels provide a wealth of data regarding investor’s interests, decisions and their behaviours. The insights that can be gleaned from that data are potentially very valuable.

Wealth managers should work with their clients and with analytics advisers to mine that data for insights into the market, for opportunities to provide client-specific advice and for opportunities to cross-sell or up-sell products and services in a highly targeted manner.

6. Connectivity
With investors ever more mobile and ever more connected, they need instant access to information and advice anytime, anywhere. Marketing talks of the ‘always addressable customer’ – the flip-side of that equation is the customer’s need and expectation that those who service them are also ‘always addressable’.

The requirement for 24x7 access has never been greater and wealth managers need mechanisms and strategies in place to address that requirement.

Summary
The new generation of investors will require management in very different ways. Whilst there have been considerable advances in the wealth management industry recently, including an increasing push into digital customer management, the industry still has considerable opportunities to further leverage technology.

This will open up a range of new revenue models for the astute wealth manager, whilst threatening the businesses of those who cannot or will not adapt. Welcome to the era of the Digital Investor.

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¹Credit Suisse Research Institute, Global Wealth Report 2012