Customer expectations, digitalization, and data aggregation will take the spotlight, says Canadian wealth tech leader
When asked to predict what wealth technology trends are going to shape the course of 2024, many self-styled tech evangelists and gurus would automatically go to artificial intelligence, or other cutting-edge innovations that, upon close inspection, are just solutions in search of a problem.
But Dr. Dan Rosen, co-founder and CEO of d1g1t, has a different approach.
“I like to look at the problem first, and then figure out which are the right technologies to help address it,” Rosen told Wealth Professional.
Based on conversations with firms, advisors, and decision-makers across the industry, he argues advisory firms are increasingly focused on being customer-centric – something the wealth tech space has not necessarily kept pace with.
“I think a lot of technologies advisors have used over time have been about automation. Of course, that’s really important,” Rosen says. “But I’m seeing a big trend toward technology to really support customer-centric advice.”
Looking over the horizon, he sees a major shift toward more customer-centric financial services in general, which is broadly being driven by evolving consumer expectations. That sentiment was clear to see as well in Broadridge’s 2023 report on digital transformation in wealth management, which found 78% of investors want companies to improve the customer experience.
But many firms are still falling short of those expectations, Broadridge found; even among firms classed as leaders in tech adoption, only 26% were found to be at an advanced stage of delivering a seamless digital experience across the customer journey.
“I think the way that financial markets are evolving is giving opportunity for fintech firms like us to really bring in very innovative solutions that prioritize and focus on the user experience, personalization, accessibility … focusing on what the client is thinking, and not what the advisor is doing,” Rosen says.
On a related note, Rosen sees a sharpening focus on digitalization. It’s been years since the COVID-19 pandemic brought the world to a virtual standstill, forcing wealth firms to accelerate years-long timeframes for digital adoption into mere months, but the momentum from that historic pivot has yet to die down.
In its 2023 report, Broadridge found 28% of IT budgets at wealth firms were being allocated to digital transformation, up 11% from the previous year. And in spite of the economic headwinds blowing against them, wealth firms responding to Broadridge’s survey said they’re ramping up investment to stay competitive, with 55% identifying digital transformation as their most important strategic initiative.
“Most advisory firms will continue their journeys of digital transformation, which includes things in the backend like automating processes,” he says. “More importantly, firms are focusing on giving customers a much better digital experience, one which I’d like to think highlights what advisors bring to the table for their clients.
“There are advisors who are great at sourcing or recommending very specific investments or funds, and there are others who are great at financial planning,” Rosen says. “I think digital tools can do a lot to enhance those relationships.”
Another wealth tech trend to watch, Rosen argues, is the ability to aggregate clients’ information in one place. He sees several tailwinds driving that evolution, including the shift toward open banking and the industry’s increased emphasis on offering a more holistic and comprehensive view of advice.
Having an integrated view of data is clearly a priority for wealth firms. When asked what they’d do if they had a magic wand to accelerate transformation, executives in Broadridge’s 2023 research said they would dramatically expand AI use and automation, break down silos between business departments, and gather and integrate all data from across their firms.
“Advisors are really focusing on talking about clients’ entire picture of wealth, and the journey they’ll be going on over the next few years. They want to help their clients live happier and more secure lives,” Rosen says.
“I think a big part of that requires us to have better data connections, to make it really easy to aggregate information on all the assets that a household would have,” he says.
