Digitising Wealth Management Enhances Client Experience

THE Covid-19 pandemic caused major disruption to many aspects of life with social distancing, contact restrictions, lockdowns, border closures as well as new ways of working. However, a positive trend we have witnessed is the acceleration of the digital transformation in industries across Malaysia and the rest of the world.

With close contact being restricted or highly discouraged during the public health crisis, companies began to adopt innovative solutions to ensure business continuity, and most importantly, uninterrupted client service. We saw the emergence of digital collaboration and reliance on technologies across business areas – from operations to sales and marketing. Post-pandemic, the digitisation of businesses and industries will continue to advance, as it has now become an integral and beneficial part of work and life.

The financial services sector has evolved and welcomed innovation in the form of digital banks, which will help to improve financial inclusion in Malaysia. In April this year, Bank Negara Malaysia (BNM) awarded digital bank licences to five consortiums, marking a new era for financial services in the country. This move will heighten competition among traditional banks as digital-only fintech companies join the race to offer financial services for clients in Malaysia. It is imperative that traditional banking institutions concentrate more fully on digitising their solutions, including advisory services that require regular client interaction, to stay ahead of the game.

Improved efficiency and new client segments

Digitising wealth management solutions requires banks to better understand clients’ needs today, especially when it comes to criteria such as convenience and control. Clients want instant access to their wealth and investment portfolios, a clear and complete view of performance data as well as real-time price movements. With digitised wealth management solutions, banks can streamline operations, manage multiple complex wealth programmes from a single application and deliver consistent advice across digital channels.

NEC subsidiary and Swiss provider of digital banking solutions, Avaloq, supports the digital transformation of wealth management and helps banks offer secure, personalised and inclusive financial services to their clients in Malaysia and worldwide.

Today, traditional wealth management advice is almost exclusively offered to high-net-worth individuals. Through digitisation, Avaloq democratises access to wealth management to make premium financial advice and services available to mass affluent investors. This opens up a highly attractive segment of new clients for banks and wealth managers in Malaysia.

The power of artificial intelligence

The digitisation of wealth management goes beyond digital platforms and channels. For example, when a bank digitises its wealth management solutions, it can use artificial intelligence (AI), big data and analytical technology to discover a client’s interests, investment patterns and behaviour. These contribute to the hyper-personalisation of services and solutions, while building trust and lasting client relationships.

Avaloq, for example, uses AI to help banks and wealth managers tap into the trend towards conversational banking – an innovative approach to relationship management based on instant communication on social messaging services. Avaloq’s AI-powered virtual assistant uses natural language processing to understand client intent to prompt best next actions to advisers, enabling them to offer highly customised service to a greater number of clients.

In short, hyper-personalisation enables banks and wealth managers to better meet the expectations of their clients, while the fundamentals of behavioural science, advanced analytics and AI can provide advisers with actionable insights and investment recommendations.

The future of wealth management

As society becomes more digitised, with business increasingly conducted online, there are undoubtedly risks with regard to data privacy as well as cyberattacks. For banks, cybersecurity is a key business priority and is essential to building trust with clients. To make the most of analytics and digital technology, banks must be constantly vigilant, closely monitor potential cyber threats and keep their cybersecurity policies up to date. Encouragingly, we at NEC have noticed cybersecurity improvements across the financial industry.

With appropriate cybersecurity measures in place, the benefits of digitisation far outweigh the risks. Digitising wealth management offers efficiency, improved productivity, real-time updates, and cost effectiveness for banks. In the next five years, Malaysia will see more digitisation, especially in the financial sector. In January this year, BNM announced the launch of the country’s five-year financial sector blueprint, which identified five strategic pillars that will propel the digitisation of Malaysia’s financial sector. For banks and wealth managers to fully leverage this vision, they need to adopt a culture of digital innovation in investment and wealth management.