Digital banking is more than a mobile app, and wealth management is no exception: it is about creating an entire experience to secure clients. Christine Schmid, Head of Strategy at additiv, reviews the true opportunities and fundamental considerations when adopting end-to-end digital wealth management.

When digital transformation is done right, it’s like a caterpillar turning into a butterfly, but when done wrong, all you have is a really fast caterpillar
 - George Westerman, MIT Sloan Initiative on the Digital Economy

Hybrid wealth – the best of both worlds   
Wealth management clients' needs vary. How clients wish to interact with their bank varies and evolves throughout their relationship and depends on the market environment. But banks must be ready to support at all times. There will be periods when clients wish for independence, and at other times they will seek guidance on the risks involved. They might even want the bank to handle everything. 

Banks must be ready, and, as Steve Jobs said: “It’s not the customer’s job to know what they want.” To offer a rich service throughout a client’s journey and lifecycle, banks must have a “hybrid” wealth solution. And finally, this must be achieved efficiently.

A hybrid approach enables clients to be offered the service that best suits their individual needs, and chose how they want to be served. Depending on these needs, the advice or support available is human or self-service, supported by intelligent analytics and offers real value:

•    It enables clients to be served far more efficiently (only accessing relationship managers/advisors when there is a real need);
•    It allows advisors to walk through proposals, optimizations and simulations in real-time; and  
•    It ensures that relationship managers remain productive and focused on clients when it matters most, which in turn improves scalability for banks. 

Rather than impeding the client relationship, a hybrid approach actually encourages collaboration - supporting in-person and remote advisor and client conversations through a multitude of channels. This approach goes way beyond the “next best trade" concept.

However, there is a common misconception about one aspect of a hybrid service: the self-service approach.  It is often confused with robo-advisor online wealth management platforms, which offer automated portfolio management, but these are poles apart.  A self-service model allows clients to gain insights and complete actions that historically would have been undertaken by an advisor as an administrative function.  

At additiv, our Hybrid Wealth Manager product enables banks to offer a truly digital solution. It is a set of digital applications for managing investments and client relationships: Workbench, Mobile Advisor and an advanced self-service model: Client Cockpit. Unlike a robo approach, our Client Cockpit only automates the menial elements previously undertaken by the bank and really puts clients with their advisor in the driver’s seat. It does this by:  

•    Offering users tools to view portfolio impact simulations 
•    Providing complete clarity by showing interactive views of positions and performance
•    Presenting personalized content, next best trade and idea generation
•    Giving quick and easy consent for advisor proposals and proposal exchange 
•    Offering real-time, secure and collaborative remote advisor, call centre communication at any time, from anywhere

Our Hybrid Wealth Manager product gives a rich and seamless customer experience across all client touchpoints. 

Build-your-own bank – the anticipated next step for APIs    
So digital should enable choice. But that choice should not just be limited to interacting through the methods best suited to the client. It should also enable banks to offer clients a range of functionality and products, to add real value.  

An application programming interface (API) enables this. APIs make it easier for developers to build products, to link with solutions and services, and thus broaden the opportunities to offer a wider range to clients. An API is a set of rules and protocols that allows clients to interact with any user agent or third-party channel to access products or services in a safe, simple and flexible way.  

At additiv, APIs are the backbone of our Hybrid Wealth Manager solution. Our omnichannel, front end-agnostic approach exploits RESTful APIs, leveraging all the benefits of APIs while also taking advantage of existing protocols to provide a high level of flexibility. These sit on top of our cloud-based orchestration engine, our DFS® system of intelligence. 

Built from the ground up, DFS® is a single platform with the agility to adapt to changing needs and the intelligence to deliver personalization, at scale. It makes an ongoing digital roadmap operable. 

DFS® system of intelligenc   
DFS® is available in the cloud or as a hybrid cloud set-up through Software-as-a-Service (SaaS), both as “out-of-box” and API-based “build-your-own-bank” delivery model. DFS® uniquely enables additiv customers to launch new propositions quickly such as Hybrid Wealth, while giving them the intelligence to maximize customer engagement according to their individual business and technology strategies. 

In the past, some large and more traditional institutions have often built their wealth management platform internally from scratch. Nevertheless, according to Forrester research, 52 per cent of those banks that built banking technology completely in-house missed their targeted timeline, and 45 per cent came in more than 25 per cent over budget. In particular, the burden of deploying basic infrastructure, designing client journeys and coding business logic and system logic was a major reason for project delays (81 per cent).  

These are sobering statistics, but they should not dissuade banks from developing in-house from the ground up, as long as they have the right foundation in place. At additiv, we are helping banks to do this, enabling Banking-as-a-Service to become a reality.  

Our clients can now access the same robust and trusted DFS® system of intelligence to “build their own bank” quickly. So, instead of us developing solution features directly for our customers, those banks who wish to manage this aspect in-house can utilise our tool kit of API modules. This enables them to easily build the functionality and client journeys themselves on top of a pre-defined, established foundation. And avoid those frightening Forrester statistics mentioned earlier. 

Sourcing and extending components this way reduces technical complexity significantly, and spreads the cost of R&D across external players. By utilizing our DFS® platform, it is far easier for banks to tailor these external components to their own brand and specific circumstances. It makes adaption to changing future needs far less onerous, removing the tendency to revert to big and costly start-from-scratch projects regularly. This frees up the bank’s own internal resources to work on building elements that are truly unique to their value offering. Now, if a bank chooses to build in-house, they can finally be truly digital. 

Enabling a bank platform model – toward Banking-as-a-Service   
So, for banks looking to build in-house, they can now become truly digital quickly without the risk of building the foundational wealth platform in-house. DFS® ensures optimum agility and intelligence to deliver the best customer experience at scale.  

It is a system which sits separately from customer channels, that can pull in data from multiple systems of record. Only such a system equips an institution with all of the information - contextual, financial, behavioral, risk-related, locational - that allows banks to understand the customer well enough to:

•    Present them with the functions that they need through a hybrid model;
•    Design the wealth management platform that their clients really want, on top through API components;
•    Understand clients sufficiently to offer meaningful advice and insight in an engaging way - at scale and at time and place where they can be a truly valued advisor;
•    Manage multiple customer segments e.g. execution-only, discretionary and advisory, for new-to-wealth to UHNW, and deliver contextualized and relevant content and experiences to each;
•    Grow their share of wallet with integrated prospect management and a rules engine to deliver compliant proposals and offers; and
•    Improve speed and service range by using APIs to quickly access services from third-party software providers or add specialist features that improve customer experience and loyalty.

Ultimately, it comes down to having a platform to adapt to changing client needs and the ability to create new models - the equivalent of a safe pair of hands to support you, regardless of your digital need. Isn’t that what digitization should be fundamentally about?

To learn more about how additiv is supporting financial institutions thrive within the digital age visit www.additiv.com or email us at webcontact@additiv.com

This is a chapter from the 2021 edition of Technology Traps Wealth Managers Must Avoid. Click here to download your free copy.