Putting ‘Wealthtech’ to Work to Expand Client Engagement

By Helen Sullivan

The wealth management and trust sector of the banking industry is undergoing significant change amid the largest intergenerational transfer of wealth in the history of the United States. In 2019, ABA published The Changing Face of Wealth Management, a report that identifies market themes and implications currently affecting the bank wealth market and advisers. The confluence of a historic transfer of wealth, changing business models and technology’s effect on redefining clients’ expectations are forcing advisors to redefine their engagement strategy and fueling the growth of the “wealthtech” market.

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Expanding client engagement efforts will be foundational for the bank of the future. Bankers have historically found their competitive advantage through their role as trusted advisers, whether in retail banking, serving the small business sector or in agriculture lending—but most prominently in their role as fiduciary trust advisers. In adjusting to current market demands, banks must expand their engagement efforts in order to attract new clients as well as deepen relations to retain existing clients.

As the transfer of wealth accelerates over the coming decade and assets more to succeeding generations, wealthtech will play an important role in assisting banks in cultivating the next generation of clients who possess greater comfort with technology than previous generations. A recent Celent report highlights the client engagement gap between the customer experience outside of the financial services industry and the services offered within the wealth management industry. As banks face growing competition for wealth management clients, they must proactively embrace and leverage technology to ensure relevance to clients. At risk are the $70 trillion in assets expected to transfer from baby boomers to millennials and Generation Xers.

The wealthtech marketplace offers a vast array of products and services that assist banks in transforming their wealth practice offerings, providing seamlessly enhanced digital customer experiences while creating operational efficiencies for the bank. Wealthtech touches nearly every aspect of the wealth management industry: client-facing improvements, artificial intelligence, machine learning and data analytics, back office trust and accounting systems.

Using an appropriate mix of technology products can improve both the outward-facing client experience while creating synergies and efficiencies internally. Collectively, these technologies can deepen the overall client engagement experience and establish firm foundations for long-term, profitable relationships.

What Wealthtech Looks Like

  • Financial planning applications. Software that helps advisers use financial planning to more effectively build, implement and manage investment strategies that meet their clients’ goals.
  • Tools for client engagement. Web-based interfaces to improve client management, financial planning, investment management, asset allocation, data aggregation, trading and compliance solutions.
  • CRM systems. Designed to improve customer retention and profitability.
  • Account aggregation software. Collects and aggregates information from accounts at different financial institutions to provide advisers a holistic view of client assets and financial situations.
  • Digital investment advice. Digital technology that offers investors and advisers automated, algorithm-based portfolio management recommendations. Digital advice programs automate the process of goal planning, portfolio selection, account opening, fund transfers and client communications.
  • Back-office automation. Automates and streamlines the operational side to allow advisers more time to focus on the client.
  • Compliance software. These programs understand the complexity of AML and KYC regulations and are designed to reduce complexity and streamline operations.
  • Savings tools. Allow banks to develop new digital channels to engage with clients and assist them with savings and budgeting goals.
  • Digital account opening solutions. Enables the opening of investment accounts online.

Helen Sullivan is an SVP at ABA, where she leads product research and endorsements in wealth, balance sheet management and digital lending.