New Solutions to Old Problems in Today’s WealthTech Ecosystem

Aligning business with technology can be daunting.  The ever-present drumbeat of advancement can be hard to keep up with, particularly in the face of institutional inertia. But, implemented well, FinTech represents a real opportunity for all financial businesses big and small to not only keep ahead of client and shareholder expectations, but to meet them more easily.

Speakers at a Jan. 30 Asset / WealthTech seminar sponsored by Morningstar and Plug and Play – the Silicon Valley startup accelerator – went a step further, painting a picture of a future in which financial technologies will not only be vital to the success of large businesses, but also give smaller dealers the ability to perform well above their weight class.

The conference framework took shape from an analysis of the asset and wealth management ecosystem presented by Accenture. Growth in assets under management (AUM) is no longer as highly correlated with profit as in the past. Business model inefficiencies that helped fast growth are holding back profitability, according to the consultancy’s latest capital markets report.

The answer lies in embracing an operating model in which business and technology are aligned:  unified solutions from up-and-comer tech startups are focused on user-friendly fixes to problems most asset and wealth management firms deal with every day.

And their message seems clear:  invest in tech solutions today, or thriving tomorrow will be much more difficult.  “Agile” may refer to a development method, but the idea is taking hold for the business as a whole. A lot of the problems that new technologies can solve are ones that less efficient business models have yet to even really consider.

Three primary themes emerged as I listened to the startups that presented solutions and the panels that discussed business trends and strategies.

1. To survive, become technology focused and evolve quickly.

It’s become something a cliché but only because the lesson is important: every company is now a technology company.

Going beyond the cliché requires a dedicated and ongoing partnership between technology and business strategists to focus on business outcomes. Technology teams can help business teams think through how technology can help the business:

  • Retain clients.
  • Provide better margins to existing lines of business.
  • Build new distribution channels for both existing and new clients.
  • Increase market reach.
  • Target new revenue sources.

In short, technology focused on solving business problems will be the differentiator for asset and wealth managers. Investing in technical talent, such as data scientists and high-level developers, will remain important. Adopting digital and cloud-technologies is important as well.

2. To become more efficient, tie specific technologies into broader processes.

It’s imperative for technology to provide workflow and cost efficiencies to all business and product lines, especially as today’s regulatory environment changes compensation patterns in advisory firms. Consider this question:

How can a combination of new technologies that solve specific problems get strung together into broader processes to make them more efficient? The businesses that figure out how to build platforms to integrate disparate systems and data flows into a seamless workflow will come out ahead.

Technical challenges lie in rationalizing hardware systems, software interfaces, and data models. Too often, the focus on “legacy systems” leaves out data models and data quality.

3. To thrive, stay a step ahead of your clients.

Clients today want asset and wealth managers to anticipate their needs, to know what they need before they ask for it. That will make the difference in retaining existing clients and winning new business.

Technology can help businesses stay a step ahead. Business models and technical systems must be able to adjust and adapt to a quickly changing markets.

Support for the front lines of the business is important as well. For all the things automation can do to reduce operating costs, for instance, the heart of the business still comes from personal contact.

Technology that makes this happen may go beyond what’s comfortable for both business and tech organizations. But with proper alignment, it’s possible to stretch while maintaining the security and trustworthiness that forms the bedrock of asset and wealth organizations.