During the current transition of wealth management into the digital era, distribution connectivity is key, according to Damian Hitchen, chief executive officer for Swissquote in the Middle East and Asia
Today’s mostly uni-channel offering involves a lot of face-to-face interactions. Direct options tend to be online or call centre brokerage channels. Inevitably, this results in an administration-heavy situation, from the front-line to the middle and back offices. Yet with industry cost-income ratios under pressure – especially in private banking – and increased regulatory challenges, he says the use of digital delivery platforms are becoming not only a driver but a pre-requisite to remain and compete in wealth management.
Further, with changing demographics, the allocation of wealth is changing, particularly in emerging markets; the relationship-delivery method needs to adapt to this. But once organisations start down the road of digital delivery, they need to constantly evolve, explains Hitchen, adding that a ‘quick fix’ alone on the front-end will not last medium to longer term.
Clients also demand change, for example in terms of omni-channel delivery from their provider; increased access and transparency on portfolios; reduced fees yet increased choice via a broader investment universe; and an enhanced ability to react to increasingly volatile markets.
The evolution of business models is already underway, he says. There is more access by new ‘non-financial’ entrants like Google, Amazon and Alibaba, plus various collaboration among service providers, across banking, cards, trading and execution.
The likely delivery models, predicts Hitchen include: first ‘holistic adapters’, involving end-to-end adoption driven by technology, although this requires scale and a large investment spend; secondly, ‘platform partners’, where firms link with platform providers; and thirdly, niche players, which are typically smaller firms focusing on selected areas of digital delivery to supplement their offerings.