Just over half of the companies in the wealth management sector will still be around in 10 years-time if they fail to innovate digitally, according to new research from B2B solution developer Nucoro.
In a new study of wealth managers, the company believes 55% of companies in wealth management will disappear if technology is not adopted. It also found that only around 20% of client-facing interactions are done digitally.
Despite this, on average they expect to increase their investment in digitising their businesses by 27% between now and 2022. In total, 43% of wealth managers are expecting to spend more in the area over the next three years.
When looking into their organizations and determining where digitalisation would have the biggest impact, 29% stated administration, 24% said client communication, and 22% noted investment and portfolio management. Other key areas voted on by the respondents were client onboarding and engagement, trading and execution and regulatory reporting.
To help improve their digital prospects, 57% of the businesses will explore partnerships with specialist technology firms, will 22% will look to build in-house solutions. Surprisingly, 11% said they will sell their business to a company strong in the area and 9% claimed they aim to merge with another wealth manager with a good digital presence.
The remaining 7% said they hope to acquire a wealth manager with a strong digital offering.
Nucoro COO Nikolai Hack said, “Digitisation is key to success in wealth management and our research shows organisations in the sector acknowledge this and are investing heavily in this area. However, the race to digitise will transform how the sector looks, with many companies falling by the wayside. There will be new entrants and a high degree of M&A activity. There is little doubt that the wealth management industry will look very different in 10 years’ time.”
The study was comprised of the responses from 53 wealth managers.
Nucoro is a cloud-based solution developer for the wealth management space. It offers tools to support the entire value chain from client onboarding to portfolio construction to billing automations.
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