Wealth managers overwhelmingly see IT as being critical as the private banking industry faces the challenges ahead – such as those concerning risk, compliance and cost effectiveness – but many are unaware of what their options are, new research commissioned by Belgian technology firm Callataÿ & Wouters has found.

Of those surveyed, 94 per cent of wealth managers responded that IT was either “very important” or “quite important”, but despite IT being viewed as an enabler, the survey also found a significant lack of awareness among managers about its deployment. In fact, some 63 per cent of respondents did not know whether their own firm’s IT systems are in-house or outsourced.

Callataÿ & Wouters also found that firms have some way to go in effectively using outsourcing: 81 per cent of those surveyed rated their cost effectiveness as “good” or “excellent”, yet only 35 per cent of wealth managers rated their company’s use of outsourcing equally highly. Furthermore, only 35 per cent of respondents outsource any of their IT function; of those that did outsource, however, the most commonly outsourced function was back office at 24.4 per cent.

According to Callataÿ & Wouters, many firms are encumbered with legacy IT systems unable to deliver in terms of cost and risk reduction and regulatory compliance. Outsourcing is one way in which wealth managers can ensure that their systems are up to date, but it is still clearly misunderstood, according to the firm.

“As wealth managers look to tackle cost, risk and compliance, a better awareness of the benefits of outsourcing is a must. For example, it allows wealth managers to benefit from best in class technologies which provide the flexibility and scalability required to meet customer demands. Furthermore, by enabling shared ownership, it also reduces operational risk and costs,” said Marc De Groote, chief executive of Callataÿ & Wouters.