This year, the Innovation & Strategy Unit of Capgemini in Italy’s Transformation Consulting Business Line has conducted a deep analysis of the Italian Wealth Management landscape. The most important part of this analysis involved Executives and CXOs of the main Private Banking and Wealth Management firms in the country, trying to outline the factors that are influencing the competition and the status of their transformation path. This article follows the analysis “Why 2019 is a Crucial Year for Wealth Management”, published earlier on this blog.
The first important outcome comes from wealth dynamics. In contrast with the global declining trend, Italian HNWI’s wealth and population increased. What emerged from our analysis is that the Italian wealth management industry is running a deep transformation path that is revolutionizing:
- communication channels between clients and wealth managers
- tools and instruments used by wealth managers in the sales activity
- business models
- training and wealth managers strategy
- back and middle office processes.
Italian wealth management firms are massively evolving their communication channels, especially those between clients and wealth managers, introducing tools for remote interactions like mobile apps, as well as dedicated and specialized call centers and chatbots. Some firms, for instance, allow their clients to contact, with or without the intermediation of their wealth manager/private banker, centralized advisory teams in order to receive high-value-added recommendations in areas like investments, protection/insurance and real estate.
If communication channels are surely an enabler of an enhanced customer experience, the main innovations came from the introduction of technologies and tools that help wealth managers in providing a higher service quality. In this sense the mantra is the following: having an augmented single view of customers is the key. Almost the entire list of firms interviewed confirms to have started projects to design and implement tools that enable customers to augment their profile, combining regulatory and commercial profiles with information from different interactions with the firm and its services. The next evolution in this sense could be the creation of a next-best-action framework, that enables to respond better and more promptly to customers’ individual needs using advanced analytics technologies. Further innovation came from the introduction of next-gen advisory platforms, which enabled a hybrid advisory model that helps private bankers through automatizing a first level of recommendations and actions on clients’ portfolios.
Other smart uses of technology are related to gaining insights on the customer base, in order to address specific commercial actions. One of this relates to the identification of high-earners-not-rich-yet (HENRYs), in order to allow them to be introduced to premium services.
Business models are evolving too, through technology and partnerships, in order to match higher expectations. For the purpose of lowering cost-to-serve of mass private clients through innovating their business model, firms are introducing B2C automated investment solutions like automated portfolio management and robo-advisory services. Some of them are creating dedicated digital private banking models, that allow remote interactions with wealth managers and centralized teams of experts.
Another important trend observed is that of extending the business proposition to clients using strategic partnerships with other firms and FinTechs, in an Open X approach, with APIs considered an important enabler to create integrated business models. Brand new services have been activated, especially in relation with real estate and insurance advisory (mainly on the protection side). While FinTechs are viewed in most cases as enablers of innovative business models, BigTechs are not yet considered as a threat by wealth management executives in Italy. In contrast with last years’ unbundling trend on wealth management services, this year we’ve detected a clear tendency to switch towards modular bundled service levels.
One of the next great trends in this field, as stated by some of the respondents, is including Health & Well-Being in the service ecosystem. This will also help in giving impact to one of the most important UN Sustainable Development Goals, Good Health & Well-Being (Goal 3). Capgemini is at the forefront in identifying a common Health & Wellness framework, supporting our industry to collaborate in the pursuit of healthier lives for investors, consumers, shoppers, employees, friends and family on a global scale.
Great attention is reserved to wealth managers’ development and caring, in a scenario of fierce competition to hire and retain the best talents. Wealth management firms are spending many resources in training their private banker workforce at different levels: industry specific skills, soft skills, technology and platform skills. Other initiatives are related to the identification of strategies to make the client transition due to wealth managers’ attrition easier. This goal is pursued mainly through serving clients via teams of wealth managers using coaching, gaining more information on customers through digitalizing their relationship with wealth managers and introducing tools to manage smart assignment and reassignment of clients.
Finally, great efforts are made in lowering costs through digitalizing and automatizing back and middle office activities. The main initiatives in this sense are related to the digitalization and orchestration of clients’ onboarding process, automatizing as much as possible while reducing operational and compliance risks, introducing robotic process automation (RPA) to automatize logic-based and repetitive procedures, as well as optical character recognition (OCR) to digitalize documents and chatbots to give a first level of support to clients and wealth managers.