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Wealth management in the GCC: Massive transformation looming

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The wealth management industry is a prime candidate for disruptive innovation Image Credit: Supplied by Comarch

The traditional approach to serve wealthy clients is being disrupted – these days, it’s about hi-touch and hi-tech combined. The GCC region is a testament to that. In fact, the wealth management industry is a prime candidate for disruptive innovation.

The pandemic has created as high a pressure on financial institutions to get to grips with technology as never before. But this is where one needs to tread lightly.

A recent study of innovation in the financial services industry jointly conducted by Deloitte and the World Economic Forum (WEF) suggests that disruptive innovation does not happen at random. It’s a deliberate and predictable process: it happens where large sources of customer friction meet large profit pools.

New age investors bring new confidence and opportunities to the wealth management industry. They also prefer to see holistic advice on how to achieve goals through a series of investment and funding approaches. And this, in turn, puts big data and advanced analytics on the forefront of transforming the industry.

Investors want the best of both worlds – the advantages of technology combined with the human touch

According to EY report, clients in the Middle East are equally likely to switch wealth asset management providers for any one of six reasons: quality and reputation, products, advisory capabilities, personal attention, pricing, or technology.

While clients may switch providers for reasons related to service capabilities, they are also looking for wealth managers that share similar values. In the region, 53 per cent of clients are placing more importance on digital savviness – the EY report says.

Furthermore, the EY research report depicts that client preferences in the wealth asset management sector are rapidly changing toward digital and voice-enabled assistants – not just for basic, transactional activities, but to manage wealth and receive financial advice. In the Middle East, 46 per cent of clients highly value simple, intuitive digital processes for their investment activities while 25 per cent currently receive financial advice through mobile apps.

A general misconception is that clients are reluctant by nature to use the latest technology for managing their wealth – in fact, customers are happy to see the tech update in this fast-moving digital adopting arena. Accenture research validates that investors want the best of both worlds – the advantages of technology combined with the human touch. The latter can help with asset allocation, mutual fund selection, or current market trend forecast.

Post pandemic, we will see a rise in the younger HNWIs, especially in the Middle east region. These people will be catered to by advisors working with the help of technology to get the best upshot – for the tailored requirement of their clients.

Financial institutions should make progress in developing new environment which will blend with the hybrid advice model – which is inevitable going forward. At the same time, they have to work along with advisors, not against them. Eventually, during this decade, we will find more and more assisted tools and one advisor for many customers.

The tools should be designed for a new generation of investors. Eventually, new firms and business models as part of wealth management will drive higher intensity of competition.

– The writer is the Business Development Manager at Comarch. Learn more about Comarch Wealth Management