So are wealth management firms actually offering more digital solutions?
Wealth management firms are certainly looking into it – but they need to speed up the process because the competition is increasing – and from all corners. In March, just nine months after Chinese ecommerce giant Alibaba Group launched its internet money market fund, Yu’e Bao, it boasted 81 million investors, which was more than the total number of active equity trading accounts in China at the time. Although Yu’e Bao’s long-term success is yet to be tested, Baidu and Tencent are also getting in on the action as well in China, and it is likely that similar internet contestants will spring up in other geographies.
Traditional wealth managers are increasingly thinking about digital solutions – but the innovation does need to speed up, or they will be threatened by more disruptors, such as Alibaba Group. Some of the competitive advantages include being able to provide more effective and efficient distribution strategies; improved segmentation and targeting of key customer groups; and faster development of more desirable products, as well as customised marketing campaigns.
Although innovative technology in the form of mobile, social media, cloud computing, big data and analytics is a key enabling factor in the digital transformation of private wealth management, the most important feature in this transformation is a shift in firms’ orientation, from selling a product to selling to a client.