Digitisation is the process of converting an object – such as a document, a sound or an image – into a digital format using technology. Fuelled by the extensive use and acceptance of the Internet, digitisation has changed almost every business.
Financial services companies are no different. South Africans are now using online banking to transact quickly and conveniently, from the comfort of their homes, offices or nearest coffee shop. News and information consumption has shifted from the traditional newspapers to online in the form of news websites, social media and blogs. Online shopping has changed not only how South Africans get their goods, but further given them an ability to compare prices and get more mileage for their money. In summary, business processes have improved with the help of automation, digitisation and technology. But while the pace of digitisation has been rapid, wealth companies have been slower to react to the new digital landscape.
Using technology and partnering up with technology partners, wealth companies can do a great deal to improve their processes and give a better customer experience to their clients.
Client acquisition is an area where technology can add significant value. Wealth companies mostly rely on their financial advisors and their networks to contact leads and source new clients. Although this has worked in the past, technology has created other opportunities in finding valuable customers. Persons seeking advice often turn to their peers. Creating a consistent social media strategy based on sharing useful financial information is an excellent way for converting followers into customers. Providing free online tools is another avenue. This can lead to the user being empowered, but can further be leveraged, as the tools can demonstrate your expertise in a financial area and may lead to users seeking further assistance for more complicated cases.
Globally, fintech companies are also seeking to digitise financial advice in the form of robo-advisors. Although machines are not yet replacing human financial advisors, many advisor tasks can be enhanced through software which assists in visualising risk scenarios and explains various economic outcomes. This can have the impact of information being processed faster, more cheaply, on the basis of a wider range of considerations, and with the removal of human error. Technology is also used for comparison purposes, and well-designed algorithms can optimise investor's objectives with the guidance of a financial advisor.
Smartphones have brought great convenience as websites and apps are accessed at fingertips. Consumers now expect the same level of service from wealth companies. Managing investments and policies online can enhance the user experience tremendously. Apps can further improve the interactions between financial advisors and clients, making them quickly accessible and avoiding scheduling meetings in person.
Lastly, technology can also be used to enhance the administration burden of wealth companies. Minimising manual processes and replacing them with automated technology can improve administration and compliance while giving a more streamlined experience to clients. These improvements will have an impact on the overall profitability of firms, particularly as it can enhance client acquisition and lower cost. Consider how much time is spent by administration staff when storing client data in spreadsheets and then later updating their holdings manually… and now consider how that time could be better spent if these processes could be automated.
Technology is not here to replace financial advisors, but rather to assist them in giving their clients a better service. While there may be expenses and risks involved in investing in technology, the risk of being left behind is far greater. In today's fast-paced digital world, this is something the managers of wealth companies will have to navigate at their peril. The businesses that adapt to this challenge and deliver a better experience to their clients will likely prosper and reap the benefits of this in the years to come.
Note on the author: Igor Rodionov is the managing director of Advicement Investment Services, which offers multiple digital and technology solutions. This includes automation of factsheets and minimum disclosure document for investment products of any kind. For more information, visit advicementservices.com.