Tag Archives: Private Banking

Will FinTech dominate the wealth management model of the future?

This short note previously appeared as update on my LinkedIn profile – I recently authored a chapter in the WealthTech Book, a financial technology handbook for investors and entrepreneurs in global wealth and asset management.

My chapter examines the impact of FinTech on the wealth management value chain. The key question I explore is whether FinTech will dominate the wealth management model of the future, or if there still a place for traditional wealth managers. While I encourage you to grab a copy of the book and read the full chapter, the answer is yes!

A lack of innovation in the wealth management sector to date can be attributed to the scattered nature of the wealth management value chain. Banks, which typically own all aspects of the B2C value chain, have been more vulnerable to disruption with new, digitally enabled entrants picking off prize elements of the chain, such as loans or payments. In wealth management, multiple players tend to own specific parts of a B2C chain, making these markets more complex and less attractive.

However, as digital savvy individuals enter the wealth management customer base, a large number of innovative FinTechs are arriving on the scene. New market entrants are already starting to compete with incumbent wealth managers across the value chain. They are leveraging a different technology-based operating model to deliver better customer experiences, at a better price and a lower operating cost. Traditional wealth managers must disrupt themselves; otherwise they are at risk of being disrupted by new players.

To remain competitive, traditional wealth managers should review and transform their traditional service delivery models, find a new balance between human and technology (yes, they go well together!) and focus on the areas where they can add the most value. In addition, they should re-evaluate their business models including how to charge for services and the most efficient, cost effective way to deliver them.

The opportunities and threats from FinTech have just started. To date, we have only scratched the surface in terms of the amount of change we can expect across the value chain. Looking ahead, I anticipate considerable disruption across operating models, especially in terms of how technology and human elements will bring together the FinTech innovations with the traditional nature of the sector.

You can read more about this topic in chapter one of the WealthTech Book. I’d be more than happy to continue this discussion, and welcome you to send me a direct message or leave a comment below!

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Resistance to change to a Needs Based Segmentation Strategy cannot be the advisor anymore…

Last year I spend two blogs around the need for adjusted segmentation models and adjusted pricing and of business models for the private banking industry.

In the first blog I detailed the importance of a Needs Based Segmentation Strategy, but also outlined some of the challenges organisation faced:

“Changing your segmentation strategy impacts the complete way a firm needs to think and should operate. It is not only operational (cross business unit thinking) it is also a cultural shift in the organizational thinking and the position of the client in the operating model. While the relationship manager was in the middle of the operating model for years, the HNWI client wants to be at the center of the operating model now and uses the different facilities around them (e.g. branch, advisor, call center, online, mobile, social media, …). The HNWI expects these facilities to be available, because these clients have personal preferences and want to make the decision themselves. -“I would like to use the channel I want to contact my bank, not the channel I have been asked to use”. – Not all clients want to be fully in control, because they like to have everything managed for them, but even this group seems to be increasingly involved in managing their own wealth. These examples, again, show the different clients and the different way of being serviced (with a different price tag that should be expected from a cost to serve perspective)”. Continue reading