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Digital Delivery and Client Centricity are Must-Haves for 2021 and Beyond

By Alexandre Farah Diniz on

Where does your firm fall on the Digital Migration Curve?

For many businesses, client centricity is already the norm. But maintaining it at a high level while transforming to fully digital delivery is not as simple as it might first appear. Across industries, the transition to an increasingly digital environment is driven by client demand for accessibility, convenience, seamless communication, and transparency.

Evidence of this transition is all around us: The increasing prevalence of technology in so many aspects of daily life influences client expectations of transaction speed and control. Instant communications and the rapid delivery of entertainment, food, and other consumer products now affects goods and service providers in other areas. The continuing impact of lessons learned during the pandemic and the need for seamless communication. And the shifting demographics in the wealth management area with the rise of Millennials.

Using two key terms, digitization (converting your analog data to digital form) and digitalization (using digital technologies to change your business model), you can get a sense of your firm’s maturity along a “digital migration curve”. Assessing your current position and taking steps to improve your preparedness in a proactive and comprehensive manner can favorably impact your business outcomes.

The complexities inherent in the wealth management environment do not mean that clients will tolerate cumbersome communication, delayed results, or unresponsiveness. Client-centric businesses know that, and they reap the benefits. A Deloitte paper on wealth management digitalization described “client-centricity” as “the most important factor in a successful business digitalization” stating that “client-centric companies are 60% more profitable compared to companies not focused on the customer.”

To forecast the future of your business, look at where you are positioned now on the digital migration curve. Ask your team the following questions to help you understand what you have already accomplished, and what you should focus on next.


  1. Can you provide strong digital and virtual engagement with your clients, balancing the needs of existing clients with the next generation of tech-savvy investors?

Ernst & Young reports that 51% of clients anticipate making increased use of digital tools moving forward, and that this trend is strongest in Europe. 78% of millennials expect to do so, as do 74% of clients in Latin America, and 64% of Asia-Pacific clients.

Half of all wealth clients anticipate more virtual engagement with their advisor in the future, with millennials twice as eager as baby boomers to conduct business this way.

Consider this disparity in light of the Deloitte assessment that between 2017 and 2060, an estimated 50 trillion in USD is expected to be transferred from “one adult population to another”, in what Deloitte describes as “the largest transfer of wealth in history.” A trend assessment by Business Insider also suggests that, within a decade, “millennials will hold five times as much wealth as they do today” and that 47% of them are willing to transition to a wealth management firm with an enhanced digital platform.


  1. As fully-digital onboarding becomes the expectation of investors, can your firm support it?

52% of global wealth managers worry that their organization’s poor onboarding experience will cost them clients, according to Business Insider. A report on digital transformation in wealth management by Celent states that digital onboarding “was an investment priority even before the pandemic.” The Celent report explains that requiring things like wet signatures, faxes, or the mailing of documents negatively impacts both the transaction experience and the customer’s overall impression of the entity imposing the requirements.

A recent Signicat report focusing on European consumers and their experiences and expectations around financial services onboarding revealed that two-thirds of customers now expect 100% digital onboarding. To improve onboarding, firms are investing in digital solutions including digital ID verification, anti-money laundering checks, and automated customer data scanning of things like utility bills.

According to Celent, 58% of those surveyed “believe customer acquisition and onboarding will experience the greatest acceleration in digital transformation, while 22% expect the most acceleration in reporting and compliance, including Know Your Customer (KYC) and anti-money laundering (AML) compliance.”


  1. Are your advisors engaged in time-consuming tasks vulnerable to human error?

Digitization of account opening, account transitions, and the use of e-signatures helps reduce the number of errors and documents not in good order, and, according to a Forbes article about digital transformation, “improves operational scale.”

Digitization also allows for a hybrid service approach. This involves automating less complex tasks, and repetitive administrative or operational tasks; reserving advisor attention and judgment for higher-value responsibilities that require them and that deliver client value.

Clients benefit through digitally-enabled interaction channels “along the complete value chain,” including things like protected and streamlined client onboarding, efficient “reuse” of available client data, and automatic confirmation of regulatory compliance, as discussed by Deloitte.

Advisors benefit from the reduction of administrative burdens associated with automating regulatory compliance tasks, including: the gathering of data and approvals; confirmation of trading and communications; prevention of fraud; and AML efforts. The ability to offer products tailored to individual clients by leveraging data is another recognized benefit.


  1. What is your digital environment? Are you still working with legacy components?

Take a closer look at your technology landscape. In an earlier post, “10 Reasons to Fully-Digitize Your Wealth Advisory”, we discussed the benefits of a single platform with integrated functionality, rather than a segmented approach (using an array of otherwise good tools that are digitally disconnected).

Consider your firm’s dependence on legacy components. Now may be the time to assess whether your current tools are capable of scaling and otherwise meeting business demands. Even software products custom-designed for your business may no longer support the functionality that your clients, your advisors, and regulators expect. Maintaining legacy components can divert resources that could more effectively be applied elsewhere, and you should not overlook the risks associated with technology inertia.

In an article about legacy systems in financial services organizations, Finextra suggested that the total impact of legacy applications can be difficult to assess, but noted that it includes “support, hardware and software costs, operational (in)efficiency and business risk.”


  1. Are you optimizing your technology to manage regulations and compliance costs?

Regulations concerning data privacy are found in the United States Fiduciary Rule and in Europe’s General Data Protection Regulation (GDPR). A Nasdaq article about trends in wealth management noted that regulations increasing the need for data governance have spurred companies to rely on technology solutions for streamlining and cost effectiveness.

By 2021, Latin America’s rapidly growing fintech industry was expected to exceed $150 billion, increasing pressure on regulators. New regulations in Latin America focus on compliance and reporting practices and impose requirements on things like AML and mandatory reporting. Governments are now requiring systems, procedures, and the regular distribution of information to clients and regulators. This means companies are weighing the benefits and costs of additional staffing against nimble and scalable technology solutions. These considerations are not unique to LATAM.


Where do you stand on the Digital Migration Curve?

The questions raised above are only some of the key drivers behind the migration to a truly digital business environment. Your answers to these questions will help you determine if you are leveraging your data to optimize client service and business performance. When successfully deployed, digitization and digitalization enhance client engagement and reduce risks and operating costs.

If your business is exploring next steps toward these goals, please contact us. We are happy to share insights and offer suggestions based on our history of successful digital migration projects, while helping you avoid potential pitfalls. We have helped numerous firms achieve complex transitions with carefully-executed step-by-step projects that minimize risk and maximize results.

Let’s discuss your challenges and goals. Schedule a meeting today.


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