Digital Innovation Creates a Wealth Management Battleground

Image credit: iStockphoto/RomarioIen

Observers of Asia’s wealth management sector will have noticed a significant increase in new apps launched by major providers in recent months as the region recovers from the pandemic.

There are several factors at play here. And they all point the way forward for the further automation of a substantial part of the relationship between wealth management providers and their clients.

One of these has been the pandemic itself. Relationship managers just haven’t been able to meet their clients face to face as often as they used to do. The new generation of apps is a natural solution to fill the gap.

Then there is the fact that automated and AI solutions have achieved a level of maturity to make such products powerful and successful. They can tailor advice and customize the distribution of information to clients to make it more relevant and individual.

Transactions have also been made more convenient. They can be automated more easily using these new tools, which can deliver to new user experience standards.

Finally, there is the competitive nature of the market itself. Asia is the central battleground between the two global giants of wealth management — Citi and HSBC. Both are investing a significant amount in people and systems as they try and grab dominance in the market.

Then there are players such as Standard Chartered and Singapore’s DBS, which, while a little smaller, still have significant client footprints and the ability to deliver high-quality new digital solutions.

Data makes wealth personal

Clients are ready for digitization, but in a more nuanced way that combines quality face-to-face contact with relationship managers using innovative solutions.

New research from big five accounting firm EY recently showed that 71% of clients would be happy to trade more personal data in exchange for more personalized service.

It is a clear sign that clients want a blended model which includes both intelligent technology and human contact.

The survey also showed that many wealthy Asian clients — as much as 60% — were considering changing their wealth managers and that the quality of their digital offering was a significant factor in making that choice.

Some of the digital services launched recently also play into the trend, highlighted in the EY research, that high net worth clients are also focused on sustainability issues.

Earlier this month, for example, Standard Chartered announced a partnership with Swedish “impact technology” provider Doconomy to introduce a digital tool that helps clients track, measure, and manage their environmental impact.

Doconomy has identified 47 sectors corresponding to the most common client purchases of goods and services. It allows clients to see how the purchases weigh across various activities on a monthly and individual transaction basis.

The fully automated index can calculate the carbon and water footprints in kilograms of carbon dioxide equivalents and water used per liter for card transactions. All this is then visualized for clients on Standard Chartered’s mobile banking application.

The bank has also been busy in South Korea, launching a new digital platform targeting the under 40 demographic. In Singapore, it has partnered with fintech BetterTradeOff to launch a new financial planning solution.

Then there is last week’s announcement of the “My RM” launch in Singapore, a new app to “bring seamless and secured connection to clients globally amidst border restrictions and travel halts.”

The bank says that 30% of its Singapore clients are internationally based, hence the need for a new app to stay in touch.

Startups want in

The major banks are not the only ones rolling out digital products in Asian wealth management.

New players also see opportunities — from out of the region and local startups — to reach new markets.

Two examples of this are Singapore-based digital wealth manager Stashaway and the well-established U.S. asset manager Nuveen.

StashAway launched in Singapore four years ago and recently announced a move into the Hong Kong market after launching in Malaysia and the U.A.E.

Nuveen is a major real estate investor with USD 1.2 trillion in assets under management. Last week, it announced partnerships with two regional fintechs to distribute its products to Asian investors.

The stakes are high, with forecasts that regional wealth will grow faster than the rest of the world, making it a highly attractive market.

All of this points to the fact that you are probably out of the game if you are not moving fast with digital products in wealth management in Asia. Or, you soon will be.

Lachlan Colquhoun is the Australia and New Zealand correspondent for CDOTrends and HR&DigitalTrends, and the editor of NextGen Connectivity. His fascination is with how businesses are reinventing themselves through digital technology and collaborate with others to become completely new organizations. You can reach him at [email protected].

Image credit: iStockphoto/RomarioIen