Why wealth firms must focus on hyper-personalization

Firms must adapt to evolving HNWI expectations and capture high-potential customer segments

Why wealth firms must focus on hyper-personalization

Even before 2020, wealth management firms have faced pressure from high-net-worth clients to provide boutique service and tailored product offerings. But as the need for personalization spreads to other customer segments, there’s greater urgency than ever for firms to tackle clients’ unique needs.

In its Wealth Management Top Trends 2021 report, CapGemini said that in the lower wealth bands, traditional firms have been subject to severe challenges from digital advice models on wealthtech platforms. That competition has been exacerbated by the pandemic, as the uncertain environment makes it even more crucial for customers to feel that their unique goals and needs are being addressed.

“HNWI clients expect best-in-class services at various customer touchpoints,” the report said, pointing to touchpoints such as personalized updates on new products or services, as well as educational market information. Citing CapGemini’s World Wealth Report 2020, it said that “more than 40% of customers say a good experience at these touchpoints have a high impact on their overall firm perception.”

Among HNW clients, expectations of a personalized customer experience are such that three fourths (74%) of those surveyed in the World Wealth Report said that if BigTech firms were to enter the industry, they would engage those firms’ wealth management services based on their ability to offer a personalized CX.

Access to new data sources and cutting-edge technologies through AI and analytics, the report added, have created the opportunity for incumbent firms to process structured and unstructured data, enabling them to personalize client offerings at scale.

“Advancements in behavioural sciences and sentiment analysis can granularly interpret client risk profiles versus restriction to five or six predefined profiles,” the report said. “Data analytics and machine learning (ML) tools can assess an investor’s trading history to help firms customize portfolios to achieve clients’ specific financial goals.”

Personalization can also come into play during critical situations, the report noted, with AI potentially being used to prevent poor investment decisions by clients who are determined as prone to overreacting in times of market volatility. And with access to a historical bank of user data, AI and APIs can be leveraged in recommendation engines to provide appropriate financial recommendations.

With APIs from multiple data sources, the report said, firms are able to stitch together a single comprehensive view of each client’s investments. Data analytics may also be used to generate aggregated portfolio reports, which can help clients make better informed, data-driven investment decisions.

“By taking advantage of real-time data and cutting-edge technology such as AI, hyper-personalization is defining the digital future of wealth management,” CapGemini said. “A customer-data-centered operating model can help WM firms better understand clients and move from a fixed product mindset to a customized proposition across the wealth management client journey.”


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