How might digital transformation help middle-market wealth management firms expand faster?

Many organisations have been compelled to examine themselves, “Are we able to compete in a digital world?” as a result of COVID-19. The answer, according to many middle-market wealth managers, is “not really.”

On the basis of in-person contacts, middle-market companies have developed highly successful businesses. Digital offerings were frequently treated as a “good enough” afterthought. They could convince themselves that their customers were unconcerned and would rather talk to them than utilize an app. That is no longer the case.

Everyone has become increasingly accustomed to using digital tools for everything from grocery shopping to “visiting” grandchildren as a result of the pandemic. Even in-person clients today want a low-cost customer experience (CX) that combines the greatest aspects of online and in-person service. Quick responsiveness, interactive dashboards, and genuine transactional systems are the new table stakes, and “good enough” is no longer acceptable. Meanwhile, bigger competitors have created robust digital suites and are adding “high touch” capabilities to give what your customers want.

The most important and fundamental factors for a successful digital transition

These principles should be viewed as the key values upon which wealth managers and management organizations should build their digital strategy in order to achieve better results.

Instill a customer-centric mindset: Customer-centricity is the most important factor in any business’s digital transformation, and wealth management is no exception. More than a good CRM tool and attractive apps with a user-friendly UI are required to become a customer-centric organisation.

Focus on the demands of multi-generational investors: When considering a digital-first strategy, some wealth managers exclusively consider the millennial population, which is a significant mistake. While millennials make up a higher share of the client base, clients of all generations expect and respond better to digital-first offerings.

Build your investment models on the outcome instead of product: Build goal-oriented products with room for personalisation as a customer-centric, digital-first wealth management service provider. In order to reach a larger audience and close more deals, wealth managers will need to move away from traditional product-based selling and focus on selling outcomes.

Rethink efficiency and drive agility through automation: Compared to any other industry, the banking and financial sector requires more complex and advanced technological solutions. As a result, a large amount of data analysis and the development of a collaborative and secure ecosystem becomes critical for wealth managers to bring efficiency and agility to their businesses.

The most important areas for digital-first initiatives, as well as the tools needed to achieve them

  • Making credit decisions
  • Analyses of customers
  • Fraud prevention and detection
  • Due diligence on behalf of the client
  • Engagement that is interactive

Find the best digital platform for you and your clients.

To supply what your clients want now, you’ll need platforms that are simple to use and adaptable to changing client demands. You’ll need to be able to do the following:

  • Use relevant digital marketing and acquisition options to reach out to your clients and prospects.
  • Add new digital services that anticipate your customers’ demands and demands.
  • Create distinctive and consistent client and advisory experiences.
  • Use data-driven analytics to generate actionable insights.
  • Reduce manual activities so you can serve your clients with the end-to-end service they desire at a reasonable price.

You don’t have to do everything. Concentrate your resources on the pillars that are most relevant to your client segmentation. These may differ according to your job title, risk tolerance, demographics, tax situation, and other factors.

Create a segmentation model that can compete with the big companies while saving money.

It might be time to rethink how you segment your customers and prospects. A good segmentation model will inform you which clients to target, how to communicate with them, and what kind of experience to deliver. Too many middle-market executives still utilise antiquated tactics like segmenting customers based on which channel they contact the most. Third-party firms have come to market in recent years with extensive data sources that can help you discover profitable (and unsuccessful) client segments early in the acquisition funnel, allowing you to save money later.

Give your customers the solutions, products, and experiences they desire right now by using personalised client experiences.

Clients of wealth management firms desire the freedom to connect and transact on their own terms. This is becoming increasingly online-only as a result of COVID-19, and it may remain thus. Consider the remote experience first before reverting to typical in-person interactions to create the CX these clients desire.

We understand that middle-market wealth managers are on a razor’s edge. Many clients, after all, desire the personal touch in addition to technical skills. You might discover that a significant portion of your clients prefer digital products if they can access in-person help when they need it, based on the data from your new segmentation models. Finding that balance is crucial to generating future wealth. For example, before investing extensively in a cutting-edge mobile platform, you’ll want to know if the vast majority of your customers prefer to transact through a laptop.

In addition, depending on the type of wealthy client you’re targeting, your experience may vary. Here are two successful tactics used by other companies:

Mass affluent strategy: Many mid-market companies cater to the mass affluent market in the same way that they cater to high net worth people (HNWIs), even when this is not cost-effective. Leading middle-market companies use a mix of remote staff and low-cost bot/AI technologies to provide a tailored approach at a low cost.

HNWI strategy: Many senior, high-net-worth clients, on the other hand, seek even more personalised service than the rest of the population. Although these HNWIs want digital possibilities, they do not demand a digital-first experience. Middle-market companies who have done well in this industry can provide that balance. Advisors, for example, can use a variety of digital tools to help them serve HNWI clients, such as concierge technology and high-yield checking.

It’s time for a Digital Reboot.

Mid-market wealth managers have been squeezed by fintech, mega-managers, and a new generation that expects all of wealth management’s indulgences for free. COVID-19 and the necessity to remain distant have exacerbated these difficulties. And the competition isn’t going to let them off the hook.

Mega-managers have a technological head start, but you have important brands, a service culture, and a track record of connections on your side. If you act promptly, you may use digital technologies to strengthen your client interactions. Consider how you can match the demands of the now with a digital transformation that will improve service and expand your client base in the future. We anticipate to see winning tactics that mix the most up-to-date digital platforms, updated segmentation modelling, and customer experiences that adapt as your customers change. Rather than working with a mega-manager, most of your clients choose to deal with a solid mid-market firm. Now is the time to give them what they desire.