Business Benefits of Digitalization in Wealth Management

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Digitalization is a challenge for wealth management firms and will provide an inevitable change in the coming decade. It is an essential aspect of modern investors’ premium service to include high-quality digital tools.

Wealth management firms are facing challenges such as addressing the threat of fintech challengers, measurable success metrics, KPIs, and the advantages of life after paper, which are essential elements of a successful digitalization plan.

It also focuses on the changing aspects of demographics and modern investors. The only way to move ahead for wealth management firms is to go digital and adopt a hybrid model of digital to serve customers and their expectations.

Key Drivers of Digital Transformation in Wealth Management:
Fintech firms are bringing new capabilities and approaches to empower technology and expertise that will boost client engagement and optimize business performance. Below are the key drivers of digital transformation in wealth management.

  • Switch to digital: According to various surveys, 40% of modern investors want digital access to their accounts, and 80% prefer using mobile applications to manage investments and communicate with advisors.
  • Costs and fee pressure: Transparency concerning fees and compensation puts downward pressure on fees, while the tremendous onslaught of regulatory requirements drives up costs in the traditional business model.
  • Competition: Digital wealth management firms are providing many challenges to the traditional wealth management model by offering more personalized and efficient digital experiences that match changing client expectations.
  • Technology: Technology enables innovative capabilities through mobile engagement, analytics, and service delivery. It offers a consistent context for interactions across channels that can be automated, giving better access to unavailable data sources to make routine process decisions.

The Importance of Digitalization in Wealth Management:

Wealth management firms need to overcome various challenges to opt for digital transformation, while customer needs change and new challenges are now entering the market, and their needs are influenced by new technologies.

The pressure for more digitalization among our clients, namely private banks and wealth managers, has increased.

Transformation is now needed by every business model to be future-proof across the front, middle, and back offices.

In addition, they are expecting a large part of banking data to be moved to the cloud in the coming years, while blockchain-based solutions will be important for the future of the wealth management industry.

To stay competitive, it is vital to strategize and maintain growth.

Strategies to remain competitive and grow in 2022 and beyond
Wealth managers need to provide more convenient and faster services with a digital experience in a more volatile and uncertain environment created by the COVID -19 pandemic. Here are some of the strategies that need to be adopted to remain competitive and grow in 2022 and beyond. 

  • Customer-Centric Approach: The customer will play a key role in designing wealth management strategies. The customer journey includes the challenges they face and the solutions they are looking for in the long run, which helps in improving the user experience at every touchpoint. Advanced Analytics, AI, and ML tools can empower advisors to get more insight into client savings and investing patterns. Therefore, the wealth management industry is at the peak of a transformation, and most of the future strategies are related to accessibility, technology, and customer-centricity.
  • Drive value through automation: Advanced analytics, enabled with AI, ML, and Blockchain, have developed various automation solutions to strengthen their operations and increase profitability by making them more efficient and secure – minimizing the risk of financial loss.
  • Hybrid/Omnichannel approach: Adopting a hybrid or omnichannel model combines the perfect solution that offers both online and traditional face-to-face services. When the traditional approach of advising face-to-face meetings was disrupted by the pandemic, the hybrid approach became vital to survival.
  • Early adopters of digitization: Early adopters are self-identified as being the first trail and use of technology in wealth management, they are unlikely to continue if their digital experience remains riddled with issues. They are intended to conduct most of their interactions digitally in the future. Therefore, wealth management firms need to meet their trust.

The Business Benefits of Digitalization in Wealth Management:
Fintech companies may use digital wealth management platforms to get the latest integrated tools and data-driven analytics they need to empower their advisors to give smart solutions. They help advisers better understand their clients’ needs and provide appropriate portfolio allocation recommendations. Below are some of the business benefits of digitalization in wealth management.

  • Client Onboarding/Paper to Digital: Digitization helps with processes like account onboarding and conversion of paper documents to digital form through advanced tools of digitalization. It helps us save money by reducing delays and reprocessing and saving time, including processing time for the back office, uploading time, processing time for front-to-back offices, and waiting time for end investors.
    • RPA (Robotic Process Automation) can provide 50% of cost reduction while reducing process time from minutes to seconds and banks have seen accuracy rates of 90%-95% with RPA implementation.
    • Removal of hard copies and multiple forms.
    • Onboard new clients remotely/e-signatures
    • Authentication/Form automation
  • Security and Communication: As firms navigate through the pandemic, the digital transformation of the wealth management industry must focus on aspects like secure channels for managing conversations and secure video communication, so clients can have a better virtual advisory platform for any such events that will demand privacy and security. 
    • Over 65%-70% of wealth management firms have plans to replace their client communications and reporting solutions by 2022. Over 30%-52%, of wealth management firms, have already replaced their client-reporting automation systems due to COVID – 19.
  • Chatbots, Robots, and the Digitally Enhanced Financial Advisor: Wealth management firms are under much pressure of adopting the changing dimensions of the world. The way modern investors access wealth management services are mostly using online chat to connect with companies. Instruments such as chatbots, powered by AI and capable ML algorithms, can impact a variety of wealth management use cases and operations.
    • Chatbots save up to 30% of customer service costs by reducing the support staff and providing a speedy solution to issues.
    • Instead of waiting on hold, customers can get answers to their questions in real-time
    • Instant responses, quick answers to simple questions, and 24/7 support
  • Collaborating with Internal and External Stakeholders: The current pandemic has significantly limited the possibilities for face-to-face exchanges between clients and advisors. Investment reviews and new mandates need to be promoted through video sessions and virtual conference rooms for group mind mapping. Providing the client with the right content and visual information on the respective portfolio, asset allocation, and investment reviews through the corresponding portal offers the unique opportunity to collaborate digitally with the advisor-client journey.

By 2025, it is estimated that 60% of wealth management firms have developed their advisory and client service capabilities with zero-touch servicing, thereby making digitalization a necessity for video call-based and portfolio sessions, as are on-demand appointments from clients through apps or web channels.

Adoption of technology in the digitalization of wealth management.
Despite clear trends in other industries, wealth management firms have been slow to adopt technology, even as global technology spending has increased significantly. Here are a few of the latest technologies that have adopted digitalization in wealth management.

  • Blockchain: Blockchain technology helps companies to separate both internal and external blockchain systems to maintain transparency and confidentiality. It also has many benefits, including security, reducing costs, smart contracts, and privacy protection.
  • AI & ML in wealth management: AI-enabled wealth management software provides these insights through interactive dashboards. ML can also create financial reports automatically for better decision-making.
  • Cloud computing: Cloud storage platforms provide more security and safeguard the confidentiality of the wealth management firms’ data with a cost reduction from their heavy investments in data storage hardware. It also provides subscription options for wealth management firms to choose the most suitable SaaS as per their business needs.

To summarize, COVID-19 gave a big push to the wealth management industry to adopt digital transformation and implement a digital mindset. However, the key to their success will depend upon the effective use of technology to advance client services and attract new investors.

Cloud, Automation, Robotic Process, AI, ML, and Blockchain will play an important role in the wealth management industry due to their ability to increase transaction security, transparency, and trust.

Thus, to be on a successful path, a wealth management firm needs to enhance customer experiences, data analytics, and new markets accessed by technology.

Cigniti’s Financial domain competency group (DCG) has in-depth experience in testing Fintech applications covering the spectrum of capital markets, sophisticated Order Management Systems interlaced with Smart Order Routers, and intricate Execution Management Systems. This helps you assure the best user experience for your customers consistently. Additionally, Cigniti’s repertoire of proprietary tools, reusable artifacts, and automation frameworks can positively impact your time-to-market significantly.

Need help? Speak to our financial domain expertise to learn more about the business benefits of digitalization in wealth management.


  • Natesh Kumar

    Natesh Kumar is accomplished in collecting, organizing, interpreting, and documentation and enjoys using his skills to contribute to the exciting technological advances that happen every day here at Cigniti.

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