Appway's Head of North America speaks out on seismic digital shift, CFR, and other trends driving tech investment
As an old English proverb says, necessity is the mother of invention. But in a multitude of cases, it’s also the mother of adoption – and you can hardly find a more textbook example than what’s happened in the wealth industry.
“We've probably seen more digital transformation in the past nine months than we have in the prior five or six years, because folks have been forced to really drive things in a digital direction,” said Andrew Besheer, Head of North America at Appway. “Any kind of process that can be virtualized, any kind of digital collaboration that they can implement to support remotely working has become really critical.”
According to Besheer, the beginning of the pandemic was marked by rapid adoption of virtual communications platforms such as Zoom, GoTo, and Teams; alongside that, organizations had to deal with issues surrounding connectivity, security, and Zoombombing, to name a few. Since then, he said the attention and IT bandwidth consumed by those things has been freed up, allowing organizations to start looking at process-based solutions, which has certainly helped technology vendors like Appway.
From where he sits, a lot of the activity that’s happened recently has been more tactically motivated than strategic. Across Appway’s current clients in Canada, he said there’s been a surge in the number of users, as well as increased exploration of how different components of their platform can be used.
“We've seen interest in things like our digital binder product, which allows collaboration between folks in the back office, middle office, and front office, all the way to their end client,” Besheer said. “Those kinds of things have become gold.”
The need for no-contact transactions has also led to increased attention on digitized forms. For Appway, that’s included broader usage of AcroFields in PDFs to accommodate manual text input, metadata, and digital signatures. Dynamic forms, where the option selected by a user can influence the fields they see in subsequent sections of the form, are another increasingly popular feature.
“One of our clients is a very old-line, established multi-family office trust,” Besheer said. “Ever since they were founded, they’ve offered high-touch concierge service to a very wealthy clientele. For the first time ever in May, they onboarded a family without ever having a physical interaction with them.”
The pandemic may have intensified firms’ focus on technology, but a good portion of the company’s conversations in Canada actually predate the crisis. On the regulatory front, Besheer noted how the Canadian Securities Administrators’ (CSA) client-focused reforms have been one of the drivers of Appway’s dialogue with Canadian firms over the last year.
“It's not terribly dissimilar to what the SEC has been doing with Regulation Best Interest or Reg BI for the last couple of years,” he said. “I think there's a lot more focus on KYC in CFR, and both initiatives are substantially focused on disclosure around conflicts of interest; KYP is also an important piece. Certainly, those concerns have driven conversations even before the pandemic.”
One direct outcome of CFR, he said, has been a greater focus on repapering accounts, particularly when one broker-dealer firm acquires another, in a compliant and timely fashion. There’s also more consideration of disclosures provided during the onboarding process, as well as the distribution of any additional disclosures that may have to be sent to existing clients. Enhancements to the risk-profiling process for new clients, including appropriate questions and scoring mechanisms to correctly gauge a client’s risk tolerance, are another item that can be baked in.
“To me, what’s really come upfront are the new rules around confirming a customer’s identity,” Besheer said. “We’re very good at integrating identity verification solutions, both through our own capabilities and through our various technology partners. That includes the ability to scan and upload official IDs like licenses and passports. Facial recognition, where the software positively identifies a person if they smile or move their face a certain way, is another feature we bring to the table.”
Those are the sorts of features that Appway promotes within its client lifecycle management (CLM) solution, which has been the speartip in its efforts to penetrate the Canadian market. Over the past 12 months, it has gotten endorsements from iA Securities and Assante Wealth Management, two prominent names in Canada’s wealth space, as they engaged the tech firm to create a digital, frictionless CLM experience by leveraging and integrating its proven workflow tools.
“I'm very excited about our activities in the Canadian market and our relationships with the Canadian firms,” Besheer said. “We have a tremendous relationship with both iA Securities and with Assante, who have been in many respects, poster children for this digital evolution of their previously more manual or physical based processes. They've been partners with us in innovation, and we genuinely love working with them.”
Going outside the bounds of the pandemic crisis and Canadian geography, Besheer pointed to the democratization of wealth management as an ongoing secular trend with which the future of wealthtech is intertwined. From a situation where low-tracking-error equity index exposure and high-quality financial planning only went to the highest-net-worth clients, he said institutions are slowly but surely opening the gates for better financial products and services to trickle down.
“There’s been an arms race in the digital financial planning space,” he said. “Back in the days, we saw EISI as the leader in Canada with the NaviPlan solution, which was extremely expensive and very, very complicated. Now, financial planning has gotten to the level where it’s being offered to almost everybody, including those in self-directed accounts, which opens the door for mass customization.”
From a product perspective, he pointed to expanding access to alternative investments, exemplified by the introduction of liquid alternatives in Canada’s retail space last year, as well as the broader opening of private-equity investments to mass-affluent investors. That growth in availability of products and planning, a trend that he estimated will drive behaviours for at least the next half-decade, is also flowing down into technology.
“We’re seeing a real desire among clients for an omnichannel experience,” he said. “In the self-directed space, we have clients who want convenience around opening accounts, adding beneficiaries and other parties, or making modifications as needed. In the advised segment, clients are looking for the ability to do that with an advisor, getting access to professional assistance and advice easily as they need it. And the barriers are all being driven down as democratization on the front end continues.”