Going digital—and mobile—in wealth management

In the post-financial crisis era, European have sought new avenues for profitable growth. There has been an emphasis on finding ways to grow without taking on the types of trading and financing risk that got so many banks in trouble in 2007 and 2008.

Private banking (or ) seems like an attractive area of growth for many banks. The Allianz Global Wealth Report for 2017 points out that the financial assets of households in Western Europe grew by 4.7 percent to a total of EUR 35.3 trillion during 2016, the latest year for which such numbers are available.

The private banking market, however, presents banks with significant barriers to entry. Private banking relationships are “sticky” and are often built on long-term, multi-generational interaction, along with considerations such as reputation and brand image. New entrants may find it hard to take share from established competitors.

But, increasingly, private banking clients have the same concerns as other bank customers do. They travel frequently, are short of time, and have become accustomed to using digital financial services. We noted in a recent report that, among High Net Worth (HNW) and Ultra-High Net Worth (UHNW) customers, 70 percent use digital financial services and 85 percent use at least three mobile devices. More than 40 percent said they were open to using mobile to check their portfolios and receive investment-related information.

Digital solutions—including well-designed mobile apps—can help banks “take the office to the client.” For example, banks using digital solutions can see where clients hold other accounts, or they can readily check whether the client uses other bank services such as business accounts or foreign exchange.

Such solutions will not replace the private banker but can help private bankers build relationships and expand service offerings. More importantly, such solutions have become essential to the kind of hybrid advice and digital wealth management that clients are now seeking.

The wealth management market is both dynamic and competitive. Traditional banks are fighting for share with new entrants using digitally disruptive technologies. In our view, private banks combining investment expertise with new digital and mobile approaches will be well-positioned, not only to keep existing clients but to add new clients who want both connectivity and personalized advice.

In my next post I will look at some of the features of a first-class mobile app for wealth management.

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