WEALTHTECH & TRADING: DIGITAL TOOLS
BETWEEN TWO
WORLDS You might be surprised by how fast and how far traditional wealth management is adopting digital technology. Peter-Jan Van De Venn from Mobiquity, Avaloq’s John Wilson and David Semmens from Wealthify aren’t! We’re all aware of the explosion of retail trading apps that sofa investors lapped up during the pandemic, which minted money for robo-platforms, propelling Robinhood to an IPO in 2021. But how far have things truly changed for the rest of the wealth management industry, including brokers, advisers, institutional investors and market-makers? And, perhaps more importantly, how will they change in future? The first prototype virtual reality (VR) private wealth management assistant, Cora, emerged a few years ago. A digital take on the personal wealth manager’s role, these virtual assistants were seen by some as a heretical and unnecessary intrusion into an industry where real handshakes were a hallmark at the time. Then COVID threatened to disrupt those relationships, and even Cora and co now seem pretty tame compared to the step change represented by avatar trading in the metaverse – a development Wall Street already thinks will be worth billions and will likely expand the newly-democratised retail investment market still further. So, how soon will you be ‘meeting’ your broker virtually on the corner of Bull Avenue and Bear Lane in your own StockCity – a version of which was developed by Fidelity Labs as long ago as 2014 – watching little blue-bird harbingers of social media doom flock around skyscrapers representing your investments, the property’s relative height indicative of real-time performance? Not quite yet, perhaps, but according to a report released in November by digital transformation consultancy Mobiquity,
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TheFintechMagazine | Issue 23
most companies accept that embracing digital technology is the way ahead – and a surprisingly large number, particularly in the UK and US, are already using virtual reality tools most days of the month. VR is right up there with open banking (#1), client dashboards and video-conferencing as among the most important digital tools for them to execute day-to-day business. The Digital Opportunity For Global Wealth Management report was based on research among 400 wealth management executives in the Netherlands, Switzerland, UK and US. It showed that the vast majority (80 per cent) have adopted, or are adopting, digital tools to improve both speed of execution and reaction to volatile markets, efficiency, and customer relations, as well as to reduce the cost of doing business – although how far they are using technology to address more fundamental structural changes in wealth management is less clear. The ‘digital champions’ among the Mobiquity cohort were, it said, ‘using augmented and virtual reality to enhance both the employee and customer experience, artificial intelligence to make faster, more efficient and effective use of the huge quantities of data being generated that underpin financial behaviours, and open banking to allow seamless transitions between financial products and pots of wealth from across multiple providers’. John Wilson, managing director for the UK and Ireland at Avaloq, a software and banking platform-as-a-service supplier to the wealth management industry,
headquartered in Switzerland, says KPIs for wealth managers are still determined by assets under management, inflows and outflows, the split across advisory, discretionary, and exo-transaction models; cost to serve, number of customers, number of transactions, and revenues and margin. But he would add another to this list. “Risk profiles have changed, in terms of the way in which companies have adapted over lockdown,” says Wilson. “So, I would say, for any wealth manager who has managed to fully integrate technology in order to maintain client relationships, that’s a success metric.” Peter-Jan Van De Venn, strategy director at Mobiquity, would agree. “Customer servicing is one of the key differentiators for wealth managers,” he says, “and our research showed that wealth managers themselves view keeping up with digital customer demands as an important success factor. For a traditional, face-to-face, advice-heavy business, that’s a huge step forward, I would say.” ffnews.com
