Experts Take a Magnifying Glass and Crystal Ball to Asia’s Wealth Management Trends

The Hubbis Digital Wealth Forum in Singapore on October 4 saw a panel of experts debate the implementation and future arrival of key digital solutions that will either propel or support the evolution of the region’s wealth management industry. The panel agreed that digital solutions are improving the overall proposition, helping with cost efficiencies, driving personalisation, empowering the advisory force and helping with access and scale. They also said there are plenty of breakthrough technologies ahead, not least the blockchain, AI and Generative AI. But they agreed that these technologies need to be carefully applied, honed and harnessed. The consensus was that it is the sum of the parts that will drive the evolution of the wealth market instead of any single technology that some might think will bring about a revolution.

Chair

David Wilson
Principal Director, Asia Wealth Management Lead
Accenture

Panel Members

Evrard Bordier
CEO and Managing Partner
Bordier & Cie

Yujun Lin
CEO, Singapore
Interactive Brokers

Michael Blake
CEO Wealth Management Asia
UBP

Mark Buesser
Chairman
IMTF

These are some of the questions they addressed:

• What are the key trends taking place in wealth management globally and particularly in Asia, and where are the biggest challenges and opportunities that digital solutions can help overcome?
• Where does Singapore sit in this regional/global wealth management landscape, and what are the key digital transformation needs ahead that will keep Singapore at the front of the market?
• What are the key priorities in terms of boosting internal and operational efficiencies and achieving cost savings?
• What are the key digital solutions that will help deliver greater client centricity, personalisation and client satisfaction?
• What are some of the advantages or possibly drawbacks of the digital investment platforms?
• Regulatory and compliance challenges just keep getting more pervasive, so what can technology do to help the wealth industry overcome these in a timely, and cost-effective manner?
• What does all this mean for the competitive environment in Singapore and further afield in Asia?

Selected Insights & Observations

Accenture reflects a bullish picture coming from its most recent industry survey and experts on the panel concurred with those views

Accenture’s latest thought leadership report – The Future of Asia Wealth Management Series 2023 – highlights the bullishness coming from leaders in the industry, with an expectation that AUM will double and revenues surge by 70% plus by 2027.

Bankers on the panel concurred with the bullish inclination, noting that there are major market-wide advances and niche opportunities to add incremental business as well. A banker said YoY in 2023 they are up around 10% in revenues on 2022. He said the mix had changed, with more focus on yield and income and also on private markets. Hiring has been more active than in 2022, with the growth of the RM force likely to be more than 50% up in Asia, reflective of their enthusiasm over potential in both Singapore and Hong Kong.

There is rapid growth in all segments, with the mass affluent market growing remarkably fast with rising numbers and increasing ‘financialisation’ of wealth, driving the thrust to scale and reach

Responding to a question from the panel Chair on the opportunities ahead in the region, a guest offered some views from the vantage point of running a comprehensive, digital-first investment management platform. “Asia’s wealth market is indeed growing apace, and the centre of gravity is shifting somewhat, driven by the region’s demographics,” he commented. “Asia has a fast-growing middle class, some of them representing the mass affluent market we are tapping into, as they increase their wealth, with some of them evolving more towards the private banking segment.”

He said that looking back to when they first obtained their Singapore license around four years ago, another major player was actually pulling out of the market. “But we were soon then lucky in timing, as the pandemic sent everyone online, even customers that traditionally would not go online, who were used to the more high touch service. And today, the mass affluent segment is a major market for us and growing well.”

He observed that different segments of clients have different needs, with providers increasingly agile at adapting their services to address specific segments. “But the big trend we are seeing is providers scaling up,” he reported. “For example, one major global asset management brand is now employing AI to rate stocks like analysts have long done, and they are achieving 99% plus similar or better outcomes. However, that does not mean they are doing away with analysts; instead, they are scaling up, hugely increasing their coverage of stocks.”

Another guest reported that it is not only in the main centres that this expansion and rising activity are being seen, but in India, Indonesia, Thailand and others where there is huge onshore wealth management growth, coupled with plentiful opportunities to encourage domestic clients to offshore investments and offshore wealth management.

Technology is both an enabler and a catalyst for the elevation of the wealth management proposition

A guest observed a divergence between technology-empowered, high volume, lower touch businesses, for example, digital type platforms, robo advisories and certain FinTechs focused on the mass affluent or event retail markets, and the white glove models in which digital solutions help improve personalisation, relevance, access and productivity.

“We are constantly striving to find ways to elevate the quality and delivery of advice,” he said. “And to improve operational efficiencies and save costs. We see a hybrid future for the upper segments of clients, where the personal touch is required, but also where we can build some scale.”

Another private banker agreed, noting that technology is also empowering a greater scope of products and access, for example, across private and alternative assets and markets, in order to deliver a more comprehensive suite and more holistic advice. Technology is the enabler of the expanding business proposition.

Compliance, onboarding, KYC, AML and privacy are all vital areas for investment with a view to further improvement, as well as more proactive areas such as CRM

There are some key areas such as KYC, AML and so forth that are vital for improving client entry points and satisfaction, as well as for cust reductions, but those are largely vital hygiene, while investment in areas such as CRM will help drive greater personalisation and enhance share of wallet and client retention. “Along with CRM, we have been working on our trading systems as well,” a speaker reported, “all improving the RM capabilities and responsiveness.”

He added that data standardisation and API integration are other vital facets in which they have been investing, to boost features and new nuanced plug-and-play solutions. “Where we see new ideas and technologies come through, then we want to be in a position to use those as quickly as possible, so we need to make sure our infrastructure is up-to-date and agile.”

Another guest noted that onboarding is also not just a one-off mission but a constant effort required to stay on top of AML issues, with newer solutions leveraging AI employed through the lifecycles of the clients, not only at the point of entry.

“It is quite a normal evolution that the new technologies actually help the two roles, the enabling and then the protecting, which can be done with high precision, with higher efficiency,” he explained. He added that smart use of smart technology should be more modular in approach, taking new solutions and embedding them one by one to ensure they work effectively and are embedded via the bank- or firm-wide adoption.

“I think projects fail because of excess ambition and a lack of patience,” he said. “Take smaller steps and build incrementally but positively.” In other words, don’t try to chase the major ‘Big Bang’ style transformation, as that will likely fail in whole or in parts.

There are plenty of breakthrough technologies ahead, not least AI and Generative AI, but firstly, these technologies need to be carefully honed and harnessed, and secondly, it is the sum of the parts that will drive the evolution, not a single technology that will bring about a revolution

A guest highlighted the power of quantum computing and its implications for security encryption. “That is why the US is all over it, fearing that accounts will get broken by quantum computing,” he cautioned. He said AI and GenAI have to be carefully handled as they can ‘hallucinate’; in other words, they need to be guided properly towards intended targets.

“You must really introduce constraints, you need to check its work, and if it breaks, or if it returns you a strange answer, you might not necessarily know why,” he commented. “Accordingly, a key challenge is to harness and apply these new technologies that almost nobody truly understands; I suspect we will go through boom and addiction for AI, and then probably a dark winter, out of which a new spring will finally emerge.”

He offered the analogy of self-driving vehicles. “The reason why autonomous driving has not been widely adopted is because if something goes wrong, there will be a crisis, even if right now it is already better than human drivers, on average,” he said.

Legally, this is also a huge challenge – who can be blamed when autonomous driving goes wrong and what legal tsunami could follow? Will it be the state, the local authorities, the manufacturers, the licensees, because it cannot be the individual driver? “The moment you lose that human oversight, then we run into problems that our society and our legal system will have to deal with and is not prepared for as yet,” he indicated.

Another guest said he was more pragmatic and less philosophical, seeing AI and machine learning as major forces driving greater precision. Similarly, the blockchain is a progression in terms of speed of contracts, immutability and transparency.

“I see it all less in a disruptive way and a more gradually evolutionary way,” he said. “First, we were speaking about machine learning, then machine learning turned somehow into artificial intelligence. We can take advantage of these things and we can integrate them, as they bring significant advantages.”

As to practical applications, he said technologies such as ML and AI or both going to empower RMs and advisors, enhance their skills and enhance their capabilities, but not make them obsolete.

It is the combined advances that digital solutions bring that will incrementally improve the wealth management offering and at the same time offset some of the areas where costs are rising so significantly.

Another panellist observed that a mosaic of integrated smart technologies will increasingly allow banks and wealth firms to deliver better solutions, and to do so at cost-effective levels, given the growth predicted for the market as a whole.

A banker commented on the reference to blockchain, remarking that for him a massive revolution underway will be in transactions, the back office, settlements, custody and so forth, as the blockchain disintermediates traditional entry and exit points and dramatically elevates transparency and accuracy. “We have teams looking closely at AI, we have teams on blockchain, we have teams on all the different solutions ahead, as we need to use them selectively and efficiently,” he explained.

The final word went to a banker who concurred, noting that there is no single disruptive technology that we can predict now which is going to change the industry. He said it is the combination of new technologies, which will most definitely change things in ways that we can predict and in ways which are very difficult to predict at the moment.

“But if I were asked to point to one thing that will disrupt, it might be central bank digital currencies, which will entirely change our relationship with money, and that will bring huge disintermediation potential as well in terms of how we think about custody, how we think about new issuance of bonds and so on and so forth. But it is really too early to say exactly what shape it will take.”

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