Picture: 123RF/Olga Yastremska
Picture: 123RF/Olga Yastremska

Banks have had to change their business models more than in any other industry.

New technology and capabilities that have been accelerated through the Covid-19 pandemic have further disrupted banking, including the hitherto slow-moving wealth management business. This has shown the importance and growth of digital banking.

But with change comes caution and fear, so it remains key for banks to maintain the human, trusted side of advising on wealth.

The question is whether financial institutions will remain committed to the new models that have evolved during the crisis.

The pandemic has required changes in behaviour from clients and their advisers — and placed greater emphasis on digital solutions, enabling remote engagement rather than face-to-face interactions. No longer can digital projects be postponed. Medium- to long-term plans have been re-evaluated to meet the current needs of clients. Wealth managers need to look through the cycle to manage what the uncertain future will look like.

Clients expect tailor-made services suited to their individual needs, whether that’s easily accessible financial management platforms or face-to-face meetings.

The adoption rate for digital wealth management solutions has increased dramatically during the pandemic. Standard Chartered launched a mobile fixed-income platform in selected African markets at the beginning of 2020. By July, up to 50% of fixed income transactions were completed using the mobile app.

The diversification of digital product offerings in investments has given clients the option to choose where to invest based on market volatility during the Covid-19 situation. However, customers still care for an experienced professional who will translate and explain the strategies proposed by the systems, while offering support in the decision-making process.

The classic, relationship-driven business model, with its communication channels such as telephone, e-mail and face-to-face meetings, will not become obsolete, but there will be a shift from personal interaction to digitally enabled client interactions via intelligent solutions and social media. We are moving towards a hybrid model of people and technology.

Increased digital capabilities have given clients greater flexibility to choose where to invest. Produce sales rose to a record high in June  due to increased accessibility through digital channels. Standard Chartered has experienced 65% digital adoption in online mutual funds throughout its African markets.

Mobile insurance

Diversification of the digital product offering can extend beyond helping clients to grow their wealth, to also enabling clients to protect their wealth. The bank experienced a 94% digital adoption rate in general insurance throughout African markets. Through its SC Mobile App it also experienced a 250% increase in wealth management transactions booked from March to April, when Covid-19 hit African markets.

Digital transactions increased during Covid-19 for mobile motor and home insurance. On a monthly average transactions were 160% higher in 2020 on the mobile app in Kenya, compared with 2019 monthly average sales.

Clients have grown increasingly interested in protecting their wealth. In the UAE the life insurance business had the highest demand for the last three years. During the crisis, and without the luxury of face-to-face meetings, the bank conducted numerous webinars, reaching more than 17,500 clients in Africa and the Middle East. The webinars were conducted by the bank’s investment strategists, economists and investment specialists, keeping clients abreast of market developments and investment strategies without the need to meet face-to-face.

Based on current trends, over the next few years the wealth management provider model will expand and refocus, with divides between people and machines fading. As client needs shift, services and interactions will evolve in multiple ways. For years wealth management advice meant a client paired with a dedicated human adviser.

More recently, as algorithms have become the trending topic, many have chosen the technology-only route, citing the lower cost and around-the-clock access it provides. However, for clients who have material assets to invest, neither alone constitutes the future of the wealth management industry. The pandemic has revealed the importance of pairing the human relationship with supportive technology.

It is becoming more apparent that firms that can provide an automated platform with periodic access to a human advisers rank are preferred across a range of investor profiles, combining the best of both worlds for clients. In this age of information overload the aim is to curate diverse market research and combine this with expertise to help clients navigate financial markets and make the most of investments.

Digital channel customers must have the ability to discuss investment and life insurance needs, review their portfolios and receive guidance on personal investment plans, execute investment and life insurance transactions, as well as update or create a customer investment profile.

Wealth managers have been quick to adapt, making tough decisions like never before, yet clients should take more comfort in knowing they are supported by dynamic individuals and cutting-edge technology. The need for different strategies regarding innovation in the wealth management industry was clear before the pandemic, and people are now embracing the much-needed advancements.

There will always be a balancing act for wealth management between the importance of 24-7 access to information digitally, with the role of human interaction that reinforces trust, especially during times when people have questions and doubts about the future.

•Dr Young is Standard Chartered Bank regional head of wealth management in Europe, the Middle East and Africa.

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