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Wealth management is evolving: Is your digital transformation strategy ready?

Sasha Chatoor

Wealth managers are navigating uncertain economic times, shifting demographics, and changing client needs. Standing still isn’t an option, and those organisations leading the pack are exploring and implementing innovative ways to future-proof their businesses.

Over the last decade, many organisations have invested in expanding their digital footprint to add value and simplify customer journeys. But digital transformation and modern platform offerings are table stakes. It’s no longer enough to be a digital business—firms must focus on strategic, intentional, and customer-centric use of technology to capture a greater market share.   

By delivering meaningful client experiences and enabling scale, technology can help bridge the persistent innovation gap in wealth management. And the rewards could be impressive. The global wealth management market size was valued at $1.25 trillion in 2020 and is projected to reach $3.43 trillion by 2030.

Want to build a case for transformation? We dive deeper into the forces driving industry change and the reasons wealth management organisations can’t afford to stand still in an evolving market.

An emerging wealth segment

As the UNHW (ultra-high-net-worth) and HNW (high-net-worth) markets become increasingly saturated, growing affluent and lower HNW segments are becoming targets for wealth managers. According to research by Oliver Wyman's Wealth and Asset Management, these segments—representing those with more than $300,000 and less than $5M in wealth—account for a revenue pool of $230bn, with only 15-20% of this group being served by wealth managers today. These segments are expected to create $45B of new revenue and account for about 60% of the total wealth management revenue pool by 2026.

Forward-thinking wealth management firms must tailor their offerings to a new (and often younger) audience who expect seamless digital experiences and a more self-directed investing experience. This means reevaluating traditional wealth management journeys and investing in digital tools that meet the needs of a new generation of customers. 

The rise of the female investor 

Another fast-growing group of investors, according to Oliver Wyman, is women. Female investors currently make up more than 40% of high-net-worth individuals and this proportion is expected to grow in coming years. The research also found that women are more risk-averse and more focused on long-term investments than men. In a traditionally male-dominated industry, wealth management firms must work harder to cater to a wider range of needs, with a focus on unique and personalised experiences. 

 A demand for new investing opportunities 

Rising interest rates and inflationary pressures are resulting in increased demand for alternative asset classes and specialised products that provide higher returns. Investors are turning to alternative investments—such as hedge funds and private equity. Demand for specialised products such as IPOs, tax-exempt investment, commodities and derivatives, REITs, and structured products is also rising. While an aging population means that pensions, annuities, and whole-life products that offer longer-term, tax-sheltered returns are moving up priority lists. However, the jury is still out on cryptocurrencies—while a small percentage of investors see them as the future, many are concerned about regulatory, market, and cyber risks. 

ESG (environmental, social, and governance) factors are also shaping investment trends. A HSBC Life report found that 72% of advisors have seen an increase in demand for ESG and sustainable investments to be held in onshore bond structures. Similarly, the success of fintechs like OpenInvest—the value-based investing company acquired by JPMorgan to meet its goal of facilitating more than $2.5T in ESG investments by 2023—reflects a growing shift towards ethical investment. 

Competing in an increasingly disrupted market 

The next generation of digital wealth providers are riding waves of change and challenging incumbents by offering targeted personalisation and better digital experiences at a lower cost with improved efficiency. These providers are more agile than legacy firms, enabling them to adopt new technologies such as GenAI and big data faster and more effectively. 

Beyond direct competition from fintechs, wealth management services are also becoming embedded in third-party environments, such as personal finance, management apps, or accounting services. Gusto is an example of an embedded wealth management experience. Gusto launched Gusto Wallet, a free app for employees to manage their savings, leveraging its existing customer base, capitalising on its network effect, and lowering customer acquisition costs. 

Transforming to stay ahead

Customers—both new segments and traditional client profiles—are becoming more digitally savvy and expect frictionless, personal, and convenient user experiences from all service providers. This is fueling a new era of digital-first or hybrid business models that aim to win market share, notably among the mass affluent and lower HNW individuals. 

Wealth managers must embrace digital transformation to keep up with evolving needs and to deliver new products. The market and customer expectations are moving fast, and organisations that hold onto legacy processes and ways of doing business will be left behind.

How to get started 

We can help to ensure your organisation is ready to serve the next generation of wealth management clients: 

  1. Align your strategic and technical roadmap: Close the gap between innovative thinking and results. Kin + Carta experts can empower you to build a pathway to success.
  2. Turn up innovation impact: In a constantly evolving technology landscape, it’s tough to know what to focus on first. Whether you are exploring GenAI, cloud transformation, or other solutions, we can identify the most impactful technologies to meet your business goals. 
  3. Keep learning: Check out our insightful AI and robo-advisory blog, catch up with the latest edition of Thread Magazine, and keep your eyes peeled for the next article in our wealth management series. 



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