With Asia set to be the wealth management hub to look out for, wealthtech has a central role to play.
We are seeing exponential growth in wealth in recent years, with Asia primed to surpass Europe as a global wealth hub. Ultra-high-net-worth-individuals (UHNWIs) are predicted to see a 268% increase in wealth by 2026, and they’re getting younger.
Along with the globalization of wealth, the entrance of new investors and younger clients means that technologies and innovations in wealth management need to keep pace.
How can wealthtech help reshape the wealth management industry, combining technological innovation with data-driven insight to drive sound financial decisions for UHNWIs?
To get some answers, DigiconAsia spoke to Zhong Hua, CTO, WRISE and CEO, VooTech:
How is wealth management keeping pace with the globalization of wealth in the digital economy?
Zhong: Digitalization and globalization have both changed the rules of cross-border trade and money movement and affected business decisions on location and investments. The combination of digital connectivity and global access saw a proliferation of wealth and investment apps and platforms simplifying many aspects of trading and financial investing for the massive mass affluent and emerging affluent market segments.
When it comes to UHNWIs, however, the simplification of wealth management is far from simple. In terms of investments, they have a diversity of assets in their portfolios, some of them bankable, some non-bankable, so keeping tabs on their administrative, legal and financial demands is often challenging, and done by a team of in-house professionals and external consultants.
WRISE is a wealth enterprise that epitomizes how digitalization and globalization has evolved from traditional wealth management. As an independent wealth management company unaffiliated with any financial institution, our business model is backed by TREX, our proprietary wealth management system that provides a smart, full-fledged family office on a platform for UHNWIs and investment offices to centralize and manage their wealth.
TREX can aggregate views of all bankable and non-bankable assets with our clients’ portfolios, giving them greater control over their wealth with full transparency of total assets, 24/7.
This digital platform service is complemented by our multidisciplinary professional services and unbiased expert advisories, so that clients are enabled with the right mix of modern and traditional services in a solution that is tailored and contextualized to their wealth management needs.
In what ways are digital technologies meeting the needs of younger investors and shaping the wealth management industry as wealth demographics change?
Zhong: The under-45 UHNWIs have a few things in common. They are savvy digital natives that are open to digital conveniences such as talking to their consultants over remote platforms or researching and learning about their investment targets on social media. And because of their global mindset, they are open to managing their wealth using better technology infrastructure, human capital and investment freedom.
Another quirk of this demographic is their risk appetite. With their global mindset, they are willing to take higher investment risks during volatile times. For example, research findings show younger investors have been aggressively speculating on digital assets during the “post-pandemic boom”. This is attributed to the accessibility of such digital assets as well as the financial volatility of the world after the pandemic, leading to an increase in the popularity of cryptocurrencies and assets like website domain names and NFTs.
This group of younger UHNWIs include the self-made billionaires, many of whom grew their fortunes from technology. These technopreneurs want the convenience of digitalization in all aspects of their lives. They want to manage their wealth off a central platform that is API integrated with their banks and comes with an inherent host of wealthtech software and advisory that they can access at will.
Why is personalization important in wealth management, and how does digitalization and automation help achieve better personalization?
Zhong: Wealth management is very much a people business. A critical advantage of technology is its ability to enhance that experience between the business and the client. If personalization is the technology that can drive exceptional customer experience and create the desired service differentiation, then this is a technology worth adopting.
In the consumer world, the recommendation system uses a hyper-personalization approach to automatically track, trace and learn a customer’s browsing habits and make precise and customized recommendations across the customer journey. In wealthtech, this translates into the ability of the system to learn the patterns in data from access to clients’ full portfolios and non-bankable assets and performance tracking. The information from the recommendation system serves as the basis for portfolio analysis and subsequent development of tailored solutions that align with the client’s specific investment needs.
Of course, this is easier said than done. The nuances involved in serving an investor are far more complicated than those of an online shopper. That is why the personalization approach on systems such as TREX is unique. With the ability to view a client’s total assets, we equip our clients with both macro and micro visibility across all assets in the investment portfolio, for bankable assets like cash and funds, and nonbankable assets like real estate, insurance and private businesses.
When combined with unbiased and customized end-to-end wealth solutions, not only can we deliver a digital family office that is customized to our clients’ demands, but also one that offers market intelligence and digital tools in context to the unique situation of each specific client.
Besides better personalization, what other benefits do technological innovation and data-driven insights offer both providers and consumers in the wealth management industry?
Zhong: There are many advantages that come with the advent of technology. It can drive the customer experience by learning from real time analytics of customer data to make intelligent recommendations that are markedly different for self-service and managed service. Depending on the situation our client is in, our experts can also design contextualized advice for them to access at will.
In wealth management, it is also important to leverage digital tools to automate and streamline processes. Globalization and the rise of the digital economy necessitated compliance with various regulations and standards across jurisdictions – namely anti-money laundering (AML), know-your-customer (KYC), assessment of investment suitability, and others. Through digital tools, wealth managers can also enforce compliance checks through customer service cycles, making them the single source of truth for tax and compliance accounting.
WRISE has been heavily investing in tech-driven cybersecurity measures to protect against cyber threats and data breaches. We employ encryption, multi-factor authentication and secure communication channels to safeguard our clients’ data and transactions. These are complemented with regular experienced third-party security audits by external parties as part of our security measures.
Advancements in smart mobile devices have also made it possible to visualize information quickly and easily within mobile applications, which in turn enhances the overall customer experience. Through intuitive visualization, analytics, and other data representations, WRISE provides more straightforward and insightful interpretation compared to traditional text-based reports. This enables our clients to gain a deeper understanding of their financial information and make more informed decisions.