The days when clients were content to have just one way of speaking to their bank are passing as new communication technologies expand how both sides engage with one another, the author of this article argues.

The following article, by Peter Schramme, chief business development officer at Objectway Financial Software, is about the changes in how clients make use of wealth management services, and the effect that technology has on these business relationships. We hope readers find these insights useful; as ever, the editors of this publication don’t necessarily endorse all the opinions expressed and invite readers to respond. 

The emergence of a new, younger breed of digitally empowered investors presents wealth managers with the need to satisfy growing client demands for increased service levels - and even self-servicing. Not only do investors wish to interact with their client reporting information, slicing and dicing the data however they wish, but they also want to be involved in the actual investment planning process.

The recent “Digitisation in Practice” report on digitisation in the affluent wealth and investment management industry (see footnote), authored by Objectway and Efma, evidences exactly how financial service providers are using digitisation to improve customer centricity and better serve their clients, together with the potential to increase efficiency and productivity by adopting digital technologies.

The rise of self-directed investing means that investment performance is no longer enough: wealth managers must demonstrate a risk-managed culture through control, transparency and absolute rigour, but at the same time provide an engagement model for their clients that suits the individual desires and demands of the whole spectrum of investors. Wealth managers must satisfy these demands in the most operationally efficient way possible, in order to deliver the required operating margins. It's a tall order.

A large majority of financial service providers now regard digitisation as key for getting closer to their clients and improving customer-centricity. For example, “align investment management with customer boundaries, constraints and desires” is expected to rise from 34 per cent to 59 per cent by the end of 2016, and “increase investment insights to customers” from 39 per cent to 59 per cent, thus demonstrating that in two years digital technology will be more actively used, with a focus on improved customer service.

Ten years ago, it was enough to interact with your clients through the traditional periodic meeting, the rest of the time maintaining contact through the telephone. Five years ago, self-service portals had replaced much of the telephone contact, as wealth managers sought to reduce costs and improve the accessibility of the investment data. 

Today, wealth managers face an environment where investors are used to engaging with organisations through multifarious channels – social media, video (for instance, video applications in all their shapes and forms are expected to grow considerably, from 19 per cent to 69 per cent in two years*), real time chat, co-browsing, face-to-face and so on. The other strong trend is the rise of branch-complementary digital channels. While 67 per cent of the survey respondents reported the branch as their main channel today, only 30 per cent said it would be their main channel in two years.

Investors wish also to be in a position to define and execute their own portfolio strategy, but have the reassurance of an advisor on hand if needed. In this new era of collaboration, wealth managers must move from ‘multichannel’ client engagement to an “omnichannel” model.

Only a 14 per cent of providers today rely on integrated and consistent real time data and interactions across their spectrum of channels. This number, however, is expected to rise up to 33 per cent in the near future, and only 3 per cent of financial institutions will remain with non-consistent experience across all channels. 

Key success factors in the shift from multichannel to omnichannel:

What are multichannel and omnichannel models of client engagement? In my view, “omnichannel” is where there are client interactions (such as client onboarding and regular client suitability monitoring) that span multiple platforms and communication channels in both the physical and online worlds. In an omnichannel model, customers expect a consistent, smooth and unified experience in all their interactions i.e. from onboarding, over investing, over customer service to support, (both pro-actively as well as re-actively). By contrast, multichannel often meant siloed experiences focused on one task or process step that targeted a specific medium (whether online / Web, phone or in person), where each task is completed within its own channel context.

The key success factors in an omnichannel approach are:

-- Hybrid service models – a digital platform that pairs its automated investing tools for investors with human advisers. One major challenge here is ensuring that the data being provided is aligned, consistent and up to date, as there can be integration hurdle within this blend of digital and physical channels;

-- Personalised customer experience – the challenge here is to create a unique and personalised user experience through different channels, aligned to the specific investment context of the client (e.g. mandates, portfolio contents, constraints, etc.). The right infrastructure or platform can enable such ‘mass-customisation’ to occur without loss of consistency or time, or increased cost or overhead;

-- Collaboration – online collaboration between investors and advisors and possibly between advisors. Investors want to feel more than just part of the process; they want to be empowered in decision-making, want to have access to tools to simulate to better understand, want to see peer-group information, etc. This requires accessible channels of communication, open 24/7;

-- Personal financial planning and management – tailoring advice to the individual investor. The key issues of KYC and suitability must still be prominent if not dominant in any omnichannel strategy.

A “real-time anywhere, anytime” experience
The shift from multichannel to omnichannel i.e. to a “real-time anywhere, anytime” experience - is a substantial task, but one that wealth managers can address to a significant extent by how effectively they can leverage their existing portfolio management systems. New digitally enabled omnichannel user experience and collaboration solutions that are loosely coupled with incumbent portfolio management systems and decision support platforms can really help simplify this transition.