Technology

The Evolution of Wealth Management: Embracing Innovation for the Next Investment Era




The Future of Wealth Management: Embracing Technological Advancements

The Future of Wealth Management: Embracing Technological Advancements

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New research outlines the necessity for wealth management firms to adapt to technological advancements and altering investor profiles for future success. In the face of a rapidly changing financial landscape, wealth management firms are poised to undergo a significant transformation.

A recent study, spearheaded by a research coalition consisting of ThoughtLab, Deloitte, and FNZ, with contributions from Amazon Web Services (AWS) and Genesys, reveals that by 2028, the investment industry will witness a drastic shift, with digital innovation and artificial intelligence (AI) becoming critical components of prosperity.

The comprehensive analysis, which incorporated insights from 250 wealth management firms and feedback from 2,000 investors globally, indicates that 55% of executives anticipate born-digital firms will significantly transform the wealth industry. Moreover, 52% of wealth management firms at the forefront of digital transformation foresee a dramatic industry reconfiguration.

A remarkable 69% of executives are convinced that AI will alter their firms’ operations substantially. Simultaneously, 47% predict that blockchain and related technologies will minimize the need for intermediaries like custodians and clearinghouses, underscoring the increasing relevance of decentralization in financial services.

Executives also forecast a trend toward commoditization of most products, compelling providers to offer value-added services to justify fees. Additionally, 39% anticipate the lines between wealth management, banking, and insurance will blur as investors demand more integrated financial solutions.

The study underscores the urgent need for digital and process transformation as Generation X ascends in influence, and Generations Y and Z, along with wealth in emerging markets, begin to shape investment landscapes. An overwhelming majority of investors, particularly younger generations, expect digital experiences from investment providers that match those of leading born-digital companies.

In response to these evolving dynamics, investment providers are elevating technology to a core competency, with a vast majority advancing towards or already implementing modernized, cloud-based platforms. These platforms enable wealth management firms to digitize operations, reduce costs, devise new business models, and tap into novel revenue streams.

Key Actions for Future Success

  1. Digitize client advice and experience.
  2. Capitalize on client diversity for business growth.
  3. Harness AI and digital innovation for performance enhancement.
  4. Innovate offerings to meet future investing demands.
  5. Adapt business models and market positioning to a new competitive landscape.

The insights from this study are critical for wealth management firms as they navigate the transition to a more digitally-driven, investor-centric future. With the right approach, these firms can not only survive but thrive in the next era of investing.

For more information and to delve deeper into the study’s findings, the full report is available for download.

Image source: Shutterstock


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