How Tech Drives Wealth Management Change - SEI

Tom Burroughes Group Editor London 31 January 2019

How Tech Drives Wealth Management Change - SEI

The UK wealth business of the investments and tech solutions group talks to this publication on how forces ranging from AI to mobile devices are changing the industry.

As part of our series of features asking industry figures about what they think technology is doing to the wealth sector, here are comments by Kevin Russell, proposition director, SEI Wealth Platform in the UK, and part of US-based SEI Investments

In your view, what technology do you see as causing the largest changes to wealth management and why? Who, what and where is leading on innovation and setting a forward example?
There is a huge amount of change going on in the wealth management industry, and much of it is driven by technology and its use to meet the needs of a more demanding consumer. It is difficult to isolate just a few of the areas creating the largest change, but in my view these would include: mobile technology, API first development, integration services, open banking and data aggregation, AI and Big Data and the evolution of AML and payment systems. The recent news that SEI will be powering Fusion’s partnership with the new Lloyds and Schroders JV is a great example of a forward-looking initiative that will provide new, extended web services and APIs. The partnership between Aviva and Wealthify is another great example, as is the move by many fintech players to power aggregation via open banking APIs.   

Firms have a budget decision to make: do they spend on technology they want for business growth and future profit, or are they forced to devote budget to tech they must have for compliance reasons? Is this decision “pain point” becoming less difficult today as so many compliance and regulatory issues have already gone through, or does it remain a big headache? 
For many wealth managers, the ongoing demands associated with regulatory change and achieving baseline compliance will continue to divert resources from focusing on profitable growth. Having said that, we are seeing more firms recognising that they cannot afford to delay decisions around investing in technology, and this challenge has increased the appetite to partner or outsource. 

Are firms getting spending on tech right by now or do they need to change? There is a case for more tech chiefs at board level – are you seeing more signs of this?
Technology is playing a vital role in driving the future success of wealth management firms.  This is reflected in various research papers published in 2018. The fastest growing and most productive firms are leveraging technology and progressive practice management strategies to build more efficient and profitable businesses.  This is also reflected in the level of influence that CTOs within those firms have on future business strategy.  

What in your view are the main technology needs of the following entities in the sector: Private bank, family office, life insurer, discretionary fund manager, independent financial advisor?
In priority order: 
CRM, financial planning, portfolio management, document management, account aggregation, compliance and risk management.

How is cybercrime affecting the willingness of firms to embrace new technologies – does it make them wary of moving fast or is it galvanizing them to act? How often does cybersecurity come up in conversations with wealth firms?
Cybercrime (data and information security) sits high on the agenda in, more or less, every conversation with prospect firms. Firms recognise that it is important to ensure clients’ data is secure and to take their oversight and due diligence responsibilities seriously.  

Wealth management is a “people business” so to what extent in your view can tech ever be a big differentiator for firms competing for business?
In our view, top-performing firms place a higher emphasis on organisational efficiency than other wealth management firms. As a result, they typically employ technology more extensively to rationalise, streamline and process workflows. This does not mean that the value of ‘people’ is replaced; rather, a combination of technology and people may provide the best answer and create the most differentiation.

Where do you put technology in the order of priorities for the industry?
The industry’s priorities focus on delivering excellent client service and operating models that provide a solid base for future growth. Both are heavily dependent on technology, but they are also dependent on the quality of people, organisational structure and good governance.    

Please in a few words give the wealth industry’s relationship with technology? 
The wealth industry is not a technology leader, nor is it a technology laggard. Investments in new technologies continue to grow, and new partnerships between young fintech/regtech firms and industry giants continue to emerge. This evolution is challenging existing ‘norms’ and business models, inevitably leading to new products and services that will hopefully better serve the consumer and address regulatory challenges more effectively.    

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