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Archive for the ‘Tech trends’ Category

Agile Innovation in Wealth Management

Tuesday, January 16th, 2018

In our most recent report Innovation for Wealth Management our analysts are looking at different - successful and less successful - approaches for innovation in the private banking industry. The relatively new trend of Agile Innovation has not yet found many  followers within wealth management but it is worth a deeper look. The main benefits of Agile Innovation techniques are the breaking down of silos within an organization and the rapid development cycles which quickly lead to a real world test of a new product or service, or just a little new feature. The risk of huge sunk costs and bad technology investments is reduced. There is some evidence that Agile Innovation can significantly improve the success rate of innovation projects. Some surveys report a success rate of more than 60% of projects. However, these numbers should be taken with some caution as every new fashionable management technique runs the risk of being overhyped.

Looking at the banking and wealth management industry we also find some examples of Agile Innovation. German Fidor Bank, Dutch ING Bank and Scandinavian Nordea are among the champions of Agile Innovation in the banking industry. All of these initiatives are focusing on retail banking or transaction banking. It is striking that we could not identify even one wealth manager or private bank that is running an Agile Innovation project. This may be due to the greater secrecy among innovation projects in the private banking space. However, we fear that it is also due to the strong anti-agility attitude we are still seeing in the wealth management industry.

While Agile Innovation may have reminded some seasoned managers of other management fads they have seen come and go, we believe that it in fact does address critical shortcomings in the innovation cycle of wealth managers:

<  Innovation is cross-functional and not boxed in somewhere deep within the organization.

<  Creating customer value is the core of innovation.

<  Real customer feedback is the measuring stick for any new feature, product or service, rather than endlessly debating risks and opportunities.

<  Innovation is rapid, feedback is rapid and success will come quickly.

Agile Innovation is not the silver bullet for all innovation projects. And of course, there are constraints in banking, like regulation, that make some things impossible or slow them down. But it is a promising path that brings tangible results instead of lofty dreams. Linking Agile Innovation to a sound strategic process where goals and overall directions are clearly prescribed is therefore a good prescription for successful innovation.

Check out our new report on Innovation for Wealth Management.

 

Standalone, digital only Robo-Advisors: between a rock and a hard place

Tuesday, December 5th, 2017

In our panel survey on Investors’ Attitudes Towards Robo-Advisors we asked 1,000 respondents from five key wealth management markets about their openness towards robo-advisors and about their preferences with regard to investment tasks, technical features and the level of human interaction when managing their assets with such an online platform.

The data shows that affluent and high-net-worth investors are very open towards robos yet have high expectations for them, too. The most remarkable finding is that there is a very clear demand for the involvement of a human advisor. The respondents are very interested in robo features such as financial planning, retirement planning and also asset selection but they do not look for a platform-only solution. While the share of people demanding regular meetings or calls is very low at 8%, 17% state that there should be a human advisor contacting them to give regular updates on their investments. The great majority, however, expects to have the opportunity to reach out to a human advisor if they have questions relating to their investments (66%). Actually, only 9% said that they would expect no human interaction at all. 9% makes a very small target market for pure robo-advisors. So, what should robos like Hedgeable, Scalable Capital or Wealthfront do?

One possibility certainly is to switch their model to a hybrid one, like Nutmeg did last year. Or, they could expand their services and offer B2B services, too, such as Vaamo. No matter which way to go, it is essential for pure robos to know their target market in detail.

Providers of pure robo advice services must make sure to address the right people but also cater for an online presence that helps clients becoming more self-confident regarding their own finances. In our Global Robo-Advisor Benchmarking 2017 report, we found that the leading pure robos indeed perform better in explaining important investment terms such as ETFs (93% of the maximum points compared to 88% achieved by the hybrid robos included). However, in the overall area of coaching, which includes the breadth of topics provided by the educational content websites, multimedia material, and personalization features, pure robos fall behind: only 51% of the maximum points are achieved compared with 54% achieved by the hybrid platforms. Other supportive features such as FAQs or explanation tools and info buttons reveal the same picture.

This is an alarming result and providers of pure robo-advisors are well-advised to not only close the gaps to the hybrid platforms but even do better than them, making human support obsolete. This is the only chance to ultimately defend their market position.

 

No WeChat? No Chance to Win HNWIs’ Hearts in China

Friday, June 23rd, 2017

Today, China is home to the second highest number of HNWIs in the APAC region and its economy is expected to overtake that of the U.S. in the coming years - some even expect this to happen as early as in 2018. The huge growth of China’s FinTech industry, a major source of new wealth it is, too, is the third pillar of China becoming one of the most attractive and promising wealth management markets in the world.

asia-wealth

This is why we focus on the Chinese wealth management market in our new report on Digital Wealth Management in Asia 2017. The second emerging market that we look at in detail in this report, is India with similar growth patterns and opportunities for private banks.

Besides presenting comprehensive research findings on the Chinese wealth market and FinTech space, our report provides an in-depth view on existing digital offerings of the ten largest wealth managers in China. Our key finding is that WeChat is essential for wealth managers’ digital strategy if they want to succeed in this unique digital ecosystem. WeChat is reported to occupy 35 percent of the time spent on mobile phones in China, which makes the social messenger an inevitable platform not only for retailers. Digital financial services are deeply rooted into Chinese people’s daily lives - thanks to tech giants Alibaba and Tencent who laid the foundation for a financial market that is unique and highly digitized.

While we could observe some international wealth managers making the mistake to link their corporate Facebook and YouTube channels on their Chinese websites, we also came across some best practices in how to engage with HNW clients on WeChat. For example, Noah Holdings Limited, a domestic private bank, sets itself apart through a broad range of WeChat features such as the possibility to check account balances, book an appointment with an advisor or read speeches from well-known investors. Additionally, Noah’s clients are provided with articles and information about recent events.

This is only one facet of the level of digital service Chinese HNWIs expect from their wealth manager. Hence, private banks wo aim at entering the Chinese market, or want to strengthening their market position, inevitably need to roll out a digital strategy that is tailored to these unique requirements.

Grab your copy of our latest research report to get a detailed picture of the wealth markets in China and India. Additionally, you will be offered an overview of current dynamics in the APAC region as a whole plus insightful glimpses into cultural differences between the Asian regions and FinTech developments in Thailand and Indonesia.

 

Why BigData projects often fail (and how to make sure yours isn’t one of them)

Thursday, June 1st, 2017

(By Onawa Lacewell, Analyst)

Big Data projects in the financial sector (and other sectors) often produce underwhelming results. It may be tempting to conclude that Big Data is just a passing fad and that wealth managers need not concern themselves with Big Data solutions. However, MyPrivateBanking’s new report on Big Data in Wealth Management thinks this is the wrong conclusion to draw from the current lackluster performance of Big Data projects. Instead, we argue that poor implementation planning that fails to take a needs-based approach is to blame for the inferior performance of Big Data projects to date. We suggest that by reversing the standard implementation process wealth managers can help ensure that Big Data projects succeed.

Why is Big Data more than just hype?

Big Data may seem like just a passing fad or a buzzword. Nevertheless, Big Data is here to stay and, from everything we’ve seen in the past five years, it seems highly likely that we are just now at the dawn of Big Data. “Big Data” simply refers to the increase volume, variety, velocity and veracity of data flooding into today’s businesses every day.

“It took from the dawn of civilization to the year 2003 for the world to generate 1.8 zettabytes (10 to the 12th gigabytes) of data. In 2011, it took two days on average to generate the same amount of data.”

(icrunchdata)

In today’s highly digital world, almost everything we do generates data: location data, social media activity, search engine metrics, and banking transactions. Additionally, as the Internet of Things brings more and more of our activity online this volume of data is only set to grow-from smart houses that provide insights into how you live to smart cars that, for example, allow insurance companies to closely monitor your driving habits. Businesses can now get nuanced, granular, and highly accurate data about their customers-both existing and potential. This is, of course, the lure of Big Data. For financial actors, the potential of Big Data is quite high. Banks can see when, where, and how their clients spend money. Wealth Managers can understand more about the behavioral profiles of their U/HNWIs. All financial actors can accurately and easily automate manual data entry processes both freeing up time for personnel to work on other tasks and reducing the possibility of data entry errors.

Why Big Data projects fail

The purpose of Big Data is clear: to help drive innovation and profits for businesses, to apply a fact-based business strategy, and to uncover insights to help increase organizational efficiency and improve client relations. Why, then, do Big Data projects have such a reputation for underperforming? MyPrivateBanking argues that much of the failure of Big Data is not because the data is somehow less useful than imagined but rather that the way many firms approach implementation sets these projects up for ultimate failure. The standard implementation process often starts with shopping around for a Big Data vendor-perhaps one that promises an all-encompassing Big Data solution that will use the firm’s internal and external data along with unstructured data (like social media commentary or search engine metrics) to modernize the entire digital ecosystem. Then, once the vendor’s solution is in place, the firm realizes that they actually don’t need all the data that they are collecting. Or, that there isn’t inhouse data science talent that can really get the most out of this new wealth of data analytically. Or, possibly, the firm realizes that the organizational siloing is standing in the way of using the new data.

A Needs-Based approach to Big Data

We argue that in order to get the most out of Big Data, and to ensure that Big Data projects are really successful, wealth managers and other financial providers should reverse the standard implementation process. Instead of focusing on the end solution, or trying to modernize the entire digital ecosystem with a general and comprehensive Big Data project, firms should instead take a needs-based approach to Big Data. The steps of this approach are rather simple, but this simple change in approach to the implementation process can make all the difference when it comes to whether your project will be successful or not.

1.     Identify the exact need (objective) of the project

This is a key step and should not be undertaken quickly-determine explicit needs, or objectives, where your firm needs a Big Data solution.

2.     Determine the type of data that best address this need

Do you need structured data? Unstructured data? A mix between the two? Determining which type of data addresses your need will help determine what type of data solution you require.

3.     Evaluate whether this data already exists within the organization

A lot of organizations think that Big Data means external data-using Facebook data, for example. However, Big Data can also mean internal data. Taking a deep look at the types of data your organization or firm already has may reveal that you don’t need external data at all-and this will determine what type of third party solution you need to shop for.

4.     Determine success metrics and expected ROI

Determining the success of a Big Data project can sometimes be difficult. Therefore, it is crucial that measures of profitability be part of the pre-planning discussion and strategy meetings.

5.     Shop around for a vendor who offers a solution that fits closely to the need

There are many different vendors offering everything from comprehensive Big Data solutions to narrowly targeted ones. Seeking a vendor that fits to your specific organizational need will help ensure that the resulting implementation plan will be a success.

6.     Determine the correct infrastructure and implementation plan to fulfill this need

Only after every other step in the needs-based chain is fulfilled should a firm or organization determine the type of infrastructure necessary for a Big Data project. The need should always drive the infrastructure-not the other way around.

By approaching Big Data from a needs-based plan, wealth managers and other financial providers stand a better chance that the resulting Big Data project will be successful. For practical information about how to take a needs-based approach to Big Data see our latest report. Here you will find practical tools that will help with determining success metrics, charting the implementation path, engaging in pre-planning and more.

 

Swissquote’s new virtual reality trading app: the game-changer or just a hype?

Monday, February 20th, 2017

It’s no science fiction story, nor fake news: VR trading is possible!

Showing an excellent understanding of how to take their digital and client engagement strategy further and create unique experiences, the Swiss financial company Swissquote has recently released a new app that enables trading with virtual reality glasses. By using a VR headset, users are enabled to view the status of their accounts, check stock prices, currency pairs and key figures in a 360 -degree perspective, as well as to execute trades by focusing their eyes on the symbol. This creative approach facilitates a different client experience by enabling users to access information and trade in a highly dynamic way.

As already emphasized by our analysts, gamification will continue to play an important role especially in young consumers’ approach towards banking and trading. The demand for creative and convenient tools and features for mobile use will definitely continue to grow. Millennials, in particular, love it when viewing their portfolio on-the-way is made enjoyable using gamification techniques or when they can quickly track their spending or savings by means of visually engaging icons. Alternatively, customer engagements can also be maximized by introducing gamification elements like customization options in promoting products or displaying client information: it creates a personal experience and gives clients the feeling of being in control while also emphasizing you as an adopter of the latest tech trends.

With Swissquote setting the tone for innovative use of VR-based technology, it won’t be long until we’ll find ourselves in a VR-based setting discussing our retirement plans or investment scheme with an enjoyable chatbot (available round the clock).

The interesting storyline will be to see as many banks and financial companies embrace innovation and leverage the potential of both VR and AR-based technology, which can facilitate customers access to a new dimension giving the feeling of a virtual infinite space. A fresh perspective for (re-)building a distinct client relationship.

 

Only robo-advisors constantly pushing ahead for superior client experience will survive

Thursday, November 17th, 2016

The pioneer years of robo-advisors have come to the end and the market will separate the wheat from the chaff. Too many automated investment services target the same, growing - but still not sufficient - client segment to nurture all or most of them. Too few of the automated investment services see their platform through the eyes of a first time user, while many are losing sight of the need for sustaining a customer experience that will - ideally - last for years.

In our new report on the leading robe-advisors worldwide, MyPrivateBanking makes a series of recommendations on the basis of our benchmarking evaluation, among them:

Aiming for transparency is the best policy, especially when presenting the robo-advisor’s pricing and product and process information.

Automated investment platforms need to be subjected to rigorous user experience testing. Looking good is not enough - equally, content must be in-depth.

Robo-advisors risk side-lining themselves if they don’t recognize that clients need financial plans as well as investment portfolios. At least a basic financial planning offer should be considered for inclusion as part of the robo value proposition.

We foresee the need for leading institutions to be more radical and wholehearted in their automated investment initiatives in the next few years, even if this means starting over again with a second robo-advisor to replace their first.

 

New Report: Mobile Apps for Wealth Management

Monday, May 30th, 2016

the-question-for-wealth-managers-is-no-longer-if-they-should-have-a-mobile-app-but-how-they-can-develop-a-winning-mobile-app11

The question for wealth managers is no longer if they should have a mobile app, but how they can develop a winning mobile app to provide them with an essential competitive advantage.

Almost eight years ago, in July 2008 the Apple App store was launched and Google Play followed only a few months later. Since then the app market has grown, apps have become an essential part of our lives and the technical possibilities have developed a lot. The wealth management industry is typically not among the first movers when it comes to technical innovations but we have seen that the market of mobile apps for wealth management is slowly but surely catching up. In our latest study Mobile Apps for Wealth Management we have analyzed the mobile apps of 30 of the biggest wealth managers worldwide. We have found that in contrast to the previous years, the number of wealth managers that offer dedicated apps to their wealthy clients has increased (from 63% in 2015 to 82% in our latest 2016 study).

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How to turn a fund website into a conversion machine

Thursday, January 21st, 2016

The habits of digital natives have disrupted the sales process in fund and asset management. Many people are using the Internet to do their own research on the firm and product offers. Only late in the process, they will get in touch with the firm they believe is most likely to match their specific needs. For financial service providers it is important to proactively facilitate an engaging communication with prospective clients already during this time in the decision making process.

According to a study by Scorpio and Pershing: “among under 35s, digital sets the direction of search for a financial provider”. When selecting a financial provider, a website is the third most influential factor for those under 35 when choosing a financial provider. The firm´s reputation and Internet search engines are also important decision making factors. Therefore, SEO to enhance website traffic and providing a convincing and interactive website have become the most important factors in the sale process. MyPrivateBanking has just released a report on “Websites for Fund and Asset Management 2016” providing a benchmarking of the websites of the leading 15 fund and asset managers worldwide. The report also gives insights into trends in the asset management industry and outlines the key factors of providing a convincing website.

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Discovering the world behind the walls of wealth management

Friday, December 4th, 2015

As digital wealth management is one of the hot topics at the moment in the financial industry, MyPrivateBanking’s analysts have embarked on a journey to evaluate remarkable and innovative features of secured websites and mobile apps for wealth management.

The forthcoming focus-style study ‘Behind the Login – Helping the Wealthy to Connect and Transact’ sets itself apart from the previous benchmarking reports by analyzing exclusively the behind the login content and capabilities of digital offerings for wealthy clients. Based on comprehensive interviews with representatives of leading wealth management firms and intensive analysis, the report explores the current and potential digital wealth capabilities, it shows how the digital strategy for wealth/private banking is defined and provides strategic recommendations and suggestions like the ‘10 essential capabilities for Digital Wealth Management in 2016’.

Don’t miss out this report on the secure site and app offerings for HNWIs! This report will be published soon – please check our website.

 

Why Crowdfunding may soon become a threat to the Private Banking industry

Thursday, October 1st, 2015

Although there has been little acknowledgment from the wealth management industry, the rise in crowdfunding in recent years has been remarkable. Goldman Sachs sizes the addressable market for crowdfunding at about $1.2 trillion. This is the total market value for crowdfunding that could be realized in the long-term. For 2014, Goldman Sachs estimates the U.S. crowdfunding market size at $10 billion, up from just $1 billion in 2011. The Worldbank forecast that global crowdfunding could increase to between $500 billion and $1 trillion by the mid-Twenty Twenties. These numbers include marketplace lending (e.g. Lending Club), equity-based crowdfunding (e.g. Circle Up and OurCrowd) and donation-based crowdfundfing (e.g. Kickstarter).

But isn’t crowdfunding something invented by hipsters to collect a few thousand dollars for some crazy art project or an even crazier new invention that will not go anywhere? That was probably true in the very beginning of the crowdfunding trend, 10 or even 5 years ago. But nowadays crowdfunding has flourished into a multi-billion-dollar industry, quickly spreading across the globe. Even institutional money is now flowing into (specifically p2p/p2b) lending-based crowdfunding chasing for better returns than one can get on a typical fixed income security.

So crowdfunding is opening up not only to small retail investors but also to institutional and private wealth. Therefore, crowdfunding brings some threats to the wealth management industry. In a way it is another tool that disintermediates investing as robo-advice does in another context. Affluent individuals, HNWIs or potentially wealthy individuals are using more or less automated platforms to engage with investment targets in a much more direct fashion compared to investing through a typical wealth manager. The functional and emotional benefits of this type of investing may - over the long run - shift assets under management away from the traditional wealth management industry.

But where there are threats there are also opportunities…. We’ll explore the whole field of crowdfunding from the perspective of wealth managers and private banks in a shortly to be published new report. Stay tuned.

 
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