The industry approaches digital from various angles. Different firms focus on different aspects, but mostly digital is spoken about in the context of client experience. To implement digital transformation projects successfully, firms need to have an organisation-wide digital strategy and focus on its people to bring the change about.
- Digital transformation is about a firm’s culture
- Firms need to focus on their people to bring about change. This includes re-evaluating incentive systems and understand employees’ motivations
- For all things digital, client trust is imperative to the demand
The discussion started with the expert setting the scene with their findings. The key observation is that most people talk to the specialists about digital from the experiential perspective, and specifically in the context of client experiences. Discussions held with people from the wealth management sector unearthed a few key trends. Namely, 63% said they wanted to improve customer experience, while 50% focused on multi-channel access and incorporating new technology. 40% highlighted the focus on investment in digital analytics.
Among key barriers to digital transformation the mentality of “people don’t ask for it” comes up first. It is common in the industry to refer to lack of client demand when evaluating whether digital transformation needs to happen. This could prove very misleading in the long term. A good example is Apple with their ability to anticipate what clients need before they know it.
“I think clients don’t know what they want”
Among other organisational barriers are fear of taking risks, lack of vision, inadequate collaboration between IT and business departments and data disconnectedness.
“Change happens collaboratively”
The session went on to focus on who should bring the sense of client-centricity to the business. It is ultimately about cultural transformation. Specifically, in wealth management sector, the big barrier is the concept of “owning the client” that is prevalent among front-line staff. Because digital transformation only happens through intense collaboration, firms need a cultural shift. Naturally, such transformation takes power away from those who “own” the client and/or specialist knowledge. This means that the ability to understand motivations and behaviours is key to finding a way to implement changes and ultimately incorporate client-centricity. Then, the firms can use technology to personalise client experience, to understand where the key moments are on the client journey that digital technology can help and where face-to-face is needed.
Because transformation requires a cultural shift and changing attitudes of employees, it is imperative to focus on people within the organisation.
“The way we incentivise people breaks things”
Existing motivation systems do not incentivise creative people, they work for mundane tasks. To build successful incentive systems, firms need to understand what matters for employees. Key things that are important for employees are being part of building something, purpose, autonomy, mastery and idea of connection.
Additionally, the ability to innovate and the speed of innovation were cited as important. An example of Amazon, who are doing a release (which is a new way of doing things) every three minutes, is relevant in this context.
“Great experiences mature (though not at first attempt), so the ability to innovate constantly is important”
However, as the participants acknowledged, it is unlikely that the wealth management industry is seen as experimentational. They rely on insight, but it is essential to understand that experimentation needs to go hand to hand with insight. The consensus was that the firms should up this agenda. It is particularly important because wealthier clients tend to use more social media. As one of the participants eloquently put it,
“We shouldn’t ignore this, we shouldn’t be seen as Luddites (and we aren’t but we don’t want to be seen this way)”
Unfortunately, this poses a challenge for internal processes in an organisation. For instance, it is not uncommon for some clients to prefer to interact with wealth management firms on WhatsApp, but the regulatory department gets unsettled by it. Another challenge for the wealth management industry that participants widely agreed on was that the business was born to manage wealth in a non-digital world.
Despite the challenges, the main strength of the wealth management industry is client trust. Participants agreed with the view that most fintechs want to partner up with big firms who have clients and their trust.
“If Facebook offered a product, you wouldn’t use it, but if Google or Amazon – people might give it a thought”
- Given the context, a few general recommendations to the industry include having a digital enterprise strategy, remember about incubation and innovation, focus on experience innovation, digital operations and cultural shift and keep in mind digital trust.
- The success of digital transformation projects are dependent on the firm culture
- Firms need to re-evaluate their motivation systems to award creativity that would enable development of successful digital projects
- Innovation best practice is to get experts from other industries who are well-versed in a specific field. Wealth management needs to be welcoming to “outsiders”. Practically, this means hiring staff from DevOps from Vodafone, for example.
Expert: Richard Sedley, EY Seren