Three things to consider when undertaking a digital transformation journey in wealth management

COVID-19 has brought on some exceptional challenges for all industries. In wealth management,  it means its technology leaders need to be more resilient, agile, and future-focused than ever, and to recognize that this is not time for incremental change—it’s time for transformative change.

Some wealth management firms are already investing in innovation, delivering new digital products and services to their clients. Since launching in 2015 throughout the Asia-Pacific market, for example, Credit Suisse’s private-banking app has won multiple awards for client experience and servicing capabilities, offering digitally empowered advice.[i] Such innovations are spurring wealth management organizations to rethink their business models.

Wealth technology (wealth-tech) managers are at the forefront of this change: they must become the source of innovation through digital leadership and act as a trusted advisor to the business. They need to consciously remove working silos to foster enhanced collaboration, innovation, and alignment across the organization so that the organization can best serve its clients.

A Deloitte study[ii] found that while certain front-office tasks in the client life cycle have a high potential for digitalization, most executives still believe their core business remains, at heart, an in-person relationship. Nevertheless, all of them have clear plans for digitalization (see Figure 1) and are continually looking for ways to digitally enable their client advisors.

Figure 1. Digitization priorities along the client life cycle

Three things to consider when undertaking a digital transformation journey:

1. Build a digital platform to support a high-touch vs. self-serve client experience

For wealth-tech leaders looking to innovate by digitalizing their services, simply adding a digital layer over existing business processes and IT systems is not good enough. Digital services and technology must be fostered through integrated skills in innovation, human-centred design, digital technology, risk, and overall leadership. It also should be implemented in strategic, creative, and adaptive ways.[iii] Wealth-tech leaders need to be able to drive a digital transformation that cultivates trust by offering the highest levels of customer service. The ability to listen intently and with empathy through digital communication will be necessary in order to find new ways to add a human touch to each conversation.[iv]

This does not mean that every customer interaction needs to be an in-person service. Wealth businesses should look at their customer segments and their overall customer value chain, then determine which touch points need to be kept in-person and which can be made more self-serve. As an example, the process involved in setting up a customer account can be made self-serve with easy-to-use digital processes. Customer acquisition and advice can be maintained as an in-person service in order to better understand the customer’s goals, priorities, and financial profile. But some customer segments, such as millennials, are comfortable using digital and robo-advisory platforms that provide automated, algorithm-driven investment services with little to no human supervision. These platforms rely on the ability of a customer to self-serve, with easy-to-use processes for digital onboarding, automated investment management, and accessible reporting. Those who aren’t comfortable with this should be able to interact with the business the way they prefer.

To enjoy a competitive advantage in the changing landscape of wealth management, a more digitally enabled operating model will be required. This model needs to include clear choices along client segments and service models. While most wealth managers give priority to digitalization in regard to client onboarding, leading firms have started to digitalize elements of the client life cycle, such as client advisory,[v]  that have traditionally been handled by people.

2.  Determine the digital platform strategy

There are many wealth-tech vendors who offer digital platforms for all points across the wealth management value chain—client acquisition, client relationship management, product and investment management, portfolio/trust administration, reporting, risk, compliance and other administrative functions. At the same time, wealth businesses also have their own in-house platforms and applications (in many cases, legacy ones) that serve their current needs—but may lack all the capabilities provided by newer digital platforms. When selecting new platforms, wealth-tech leaders have a choice to make: pick one single platform to serve their entire wealth value chain or pick multiple platforms that each serve specific areas of the value chain, plugging them in as needed into existing parts of their current technology architecture.

They’ll need to understand how a new platform will fit into their organization’s structure, as well as the suitability, cultural flexibility, and openness across the entire organization for new technology. For example, some large wealth management firms, like large banks, have multiple lines of businesses with differing profit and loss statements. In such organizations, opting for one single unified digital platform that serves the entire wealth value chain can run into conflicting priorities, objectives, and demands across the various lines of businesses, as well as a cultural resistance to change.

These problems can halt growth and eat into budgets. Therefore, wealth firms need to evaluate their digital platform strategy to determine which aspects of the value chain will be core to their value proposition and key to their differentiation, and which will be delivered through strategic partnerships. A robust understanding of the organization’s strengths will help define the right partners, the right roadmap, and the right execution model to eliminate silos and maintain alignment with core strategy and business principles.[vi]

3. Apply a portfolio approach to funding and managing transformation

Embarking on a digital transformation initiative is no easy feat, of course, but some experiences provide important cautionary tales. A Harvard Business Review (HBR) study[vii] of disaster cases in transformation journeys suggested there are serious deficiencies in practice that involve both general management and technology management. The first two are the failure to assess individual project risk and the failure to consider the aggregate risk of the portfolio of projects. Wealth-tech leaders can avoid many of the problems by assessing the risks—in isolation and as a portfolio—before implementing the initiatives.

Most companies invest in digital transformation initiatives along a scale of risk and reward. Like financial investing, the overall goal in a transformational journey should be to construct a portfolio of initiatives that produces the highest overall return in relation to the firm’s appetite for risk.

Another HBR study[viii] looked at the allocation of funding and resources in companies across their core, adjacent, and transformational initiatives. It found that companies that allocated approximately 70 percent of their innovation activity to core initiatives, 20 percent to adjacent ones, and 10 percent to transformational ones outperformed their peers in share price. However, the return ratio on these innovations was roughly the inverse of that ideal allocation: core innovation efforts typically contributed 10 percent of the long-term, cumulative return on innovation investment, adjacent initiatives contributed 20 percent, and transformational efforts contributed 70 percent.

In light of this, wealth management firms should articulate a clear innovation ambition with the right balance of core, adjacent, and transformational initiatives across the enterprise. They should put in place the tools and capabilities to manage the initiatives as parts of an integrated whole. Rather than hoping their future will emerge from a collection of separate efforts with competing timelines, budgets, attention, and prestige, they should be aiming for total innovation.



Radhika Bansal
Senior Manager, Consulting
Tel : 416-775-8518

Vithal Ketkar
Manager, Consulting
Tel : 416-601-4369


[i] Deloitte, Empowering the virtually enabled advisor

[ii] Deloitte, Navigating towards a 'next normal' after COVID-19 - Lessons from APAC Wealth Managers

[iii] Deloitte, Digital Transformation Playbook Release 4.1

[iv] Deloitte, Wealth management and advice in the time of coronavirus - A Deloitte perspective on industry impact of COVID-19

[v] Deloitte, COVID-19: Digitally-enabled Wealth Managers will lead the way in the 'new normal'

[vi] Capco, The evolution of the Financial Adviser Platform

[vii] HBR, Portfolio approach to information systems

[viii] HBR, Managing your innovation portfolio

This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.

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