15 July 2018James Goad

Artificial IntelligenceBack OfficeBig DataCloudCyberData ScienceDigitalFintechFront OfficeManagement InformationMobileOnboardingSecuritySocial Media

Wealth management as an industry is behind the retail banking sector when it comes to data. The opportunity exists for firms to improve internal efficiencies through the use of technology but the challenge of getting this to the top of the business priorities list is significant. It is crucial that the industry understands the benefits of disruptive technology and how to use this to drive competitive advantage.


  • Wealth management industry participants are playing catch up with the retail banking sector in transforming their use of data through digital tools available to them.
  • Firms are facing challenges internally across the spectrum in implementing this.

Key issues and challenges:

  • The discussion started with setting the scene for the discussion across three topics: where we are today and what disruptive tools exist, the drivers and inhibitors of change, and what we as an industry should be doing to leverage those tools.
  • Tools that are being talked about and use are: Robotic Process Automation (RPA), Artificial Intelligence (AI), Machine Learning (ML) and Blockchain.
  • While we are clear about the tools available to drive innovation, having the tools is not enough. Firms need to create ideas in being clear on how they can use those tools.
  • Collaboration is the third item important in regtech. Tools, Ideas and Collaboration are key elements for innovation.
  • The discussion continued with participants acknowledging that data usage is scarce in wealth management industry, although the industry has plenty of data available. “We use robots a lot in the operational side of business and more in the investment banking part.”
  • Delegates felt that Big Data is relevant in the mass affluent and retail space, but in wealth management, the scale is different. Most data is input in the textbox of various forms that the organisation uses internally making it difficult to standardise.
  • More importantly, when asked about the views of the firm representatives in the room, nobody thought their data was in good shape. Delegates felt the Retail part was probably in good shape, but not in wealth. Retail and transaction-based banking has been digitized much earlier.
  • The data discussion in wealth management often touches upon KYC and on-boarding procedures. Because the client controls the data, the question arises about a common standard of reporting.
  • One of the proposed solutions could be an aggregator who could standardise it. However, the participants were conscious that a few different start-ups would have different systems. An argument was made that perhaps the industry should push industry associations to work on this and push through this agenda.
  • Along the same thoughts, another point made by some participants was that most data is held with Google, and other digital companies. So when looking for standardising the data, it was suggested that those companies are best placed to look at. As one of the participants put it, “We’re not good at data - they are.”
  • However, in terms of integrity of that data, the worry generally stems from the fact that there is no existing validation of data since tech companies are more about behaviours. Yet their skills in pulling data and its aggregation makes the industry participants think that potentially those companies could get there faster than the wealth management industry would.
  • When it comes to AI, the agreement in the room was that this could be useful in the international and complex investment space. Specifically, AI could be used for AML / background checks. “It can find very “interesting” things that will block an account opening; as a result, we only open one in 50 accounts for Russians. Compared with 5-10 years ago, we’re now light years ahead.”
  • One of the things that participants raised during the discussion was how data reconciliation is happening with other functions, e.g. reporting. The data is approached bottom up, particularly in the regulatory context, and often involves pulling the data from multiple sources manually using spreadsheets. This presents an opportunity for commercial benefit for those who can automate this process. Tech is now available to help with this, particularly when it comes to transaction tracking. It would also contribute to identifying accountability.
  • However, there are issues that are holding wealth management industry players back on that front. The first is that businesses would be hampered by budget constraints, which frequently arise due to other more “exciting” business opportunities. “You’d need a few thousand dollars to invest into it, to save hours of time, yet the business will go ahead and do an acquisition that will be paid for during the rest of the business life.”
  • Another issue is short-termism, i.e. treating each regulatory submission as an ad hoc query. Specifically, as a deadline approaches, the company will throw in a lot of money and time and execute manually. As soon as the results are submitted, firms move on to the next “crisis”.
  • The manual nature of the regulatory submission quite often means it is onerous and spreadsheet-heavy so there is always an opportunity to automate to be more cost-efficient, but the underlying problem is that it never makes it to the top of the priorities list. “It’s about the next crisis or the next shiny thing.”
  • The general agreement was that in order to drive a data-related agenda internally businesses need to have data strategy that is sponsored by business owners with responsibility at board level. However, there is a lack of understanding in what a data strategy looks like and the topic of data ownership can be ambiguous.
  • Eventually, the quality of data becomes one of the controls that tell you if the business is doing well. Some participants in the room felt it is a core component, like suitability.
  • In an audit, technology adoption is driving a big increase in precision. The technology is there to transform the data, and the regulator is there to provide the incentive to do that. Now it is about doing it in a timely manner.

Conclusions and solutions:

  • Data transformation is inevitable and other industries have successfully implemented digital transformation projects.
  • The regulator provides the incentives for firms to clean and update their internal data processes.
  • The opportunity exists for firms to become more efficient through the implementation of digital tools available on the market.

Expert: Tim Fundell
Sponsor: Autorek