A few years ago, banks and other financial institutions were focused on grand ambitions of leveraging pioneering technology to revolutionise their offerings. Today, however, companies are realising that they need to align their digitalisation efforts with the changing expectations of their customers in order to protect their business and achieve growth.
Expectations are changing in three notable ways: first, customers want products to be personalised to their needs; second, they want services to be conveniently available through a mobile device; and third, they want the complexity removed from wealth management.
Focusing on customer experience
The impetus to meet those needs has never been greater. Just recently, Hong Kong, Singapore and Taiwan have granted or are preparing to grant banking licences to virtual banks. All of these banks have intentions to launch new and innovative products. Given how nimble these competitors can be, it is unsurprising that established players have started to act by leveraging their large consumer base, brand and trust to roll out new platforms and offers. Think of the PayMe app launched by HSBC in Hong Kong or DBS’s digiPortfolio platform in Singapore.
What these new platforms have in common is that they are focused, offer a simple and engaging customer experience, and have very broad appeal among customers. Instead of responding to disruption with very complex and advanced technology, successful financial institutions, including asset managers, are launching simple, easy-to-use online platforms that resolve their customers’ pain points in offline services to create better customer experiences.
For instance, banks have launched platforms that allow their customers to access an investment portfolio that is aligned to their risk appetite. The customer can easily track portfolio performance on a mobile device and receive notifications when attention is required.
Such platforms do not create the kind of earthquake that artificial intelligence and machine learning can, but they simplify and enhance the customer experience without overwhelming them with a flood of functionality and choice.
The signs are that this is already widening the gap of success between big financial institutions and smaller business-to-consumer companies, which are struggling with client acquisition costs and do not enjoy the reputation, brand and trust of established players.
Think big, start small
Simplification is not an end goal in and of itself. Asset managers realise that they cannot just be product providers to their clients or intermediaries. They have to be solution providers too.
Given that digital transformation will likely be an ongoing trend as new technology emerges, financial institutions now understand that launching simple platforms is not a static, one-off event, but a foundation for an iterative and agile product development approach.
As such, established players are rolling out platforms to their customers, with a view to building on them slowly and enriching the features over time. This approach allows them to incorporate user feedback and respond to market opportunities. Once onboarded, customers are likely to stick with a digital wealth management provider that meets their needs. Once the platform has strong foundations, it can meet increased customer needs by integrating new technologies such as voice recognition and AI at a later stage when it becomes more viable.
The start-small-and-expand approach ensures scalability. Once live, additional investment journeys can be easily added as the same engine drives the required functionality for different journeys. The other key advantage of starting small is that deployment time and complexity are reduced, leading to a shorter time to market, which is critical to capturing market share.
One example might be the development of a robo platform from today’s single fund offering to the first phase of enabling customers to buy a well-constructed portfolio matched to their needs. Subsequent phases can link these portfolios to life goals, gathering information about a customer’s financial needs and tailoring a plan to achieve them. Then, of course, the financial institution could add regular savings plans, top-ups and introduce auto-rebalancing to minimise the customer’s burden.
Further iterations could then begin to evaluate the huge data pools financial institutions have to help customers understand their spending habits and save smarter. The goal with each iteration is to make wealth accumulation effortless.
For now, the focus is on the customer experience and the user journey, rather than jumping straight in with a suite of fancy and complex technology. By leveraging online platforms to improve services, traditional players in the industry are evolving from quiet bystanders in this era of digitalisation to leading the way in making wealth management more engaging and less time consuming for their customers.