Wealth Management in the Digital Age Capgemini

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Table of Contents,1 Introduction 3, 2 Exciting Times in the Global Wealth Management Industry 4. 2 1 Record Levels of HNWI Population and Wealth 4,2 2 An Industry Marked by Disruption 5. 3 The Future of Wealth Management is Digital 7,3 1 Busting the Digital Myth 7. 3 2 HNWI Digital Demand and the Implications of Inaction 9. 3 3 A New Dynamic Wealth Manager Digital Demand 14. 4 A New Value Proposition for the Wealth Manager of the Future 17. 4 1 Wealth Managers Continue to Play a Vital Role 17. 4 2 Needs of Younger HNWIs Change the Dynamic 17,4 3 The Evolving Role of the Wealth Manager 19. 5 Firms Need to Ingrain Digital Throughout Client Experience 21. 5 1 STRATEGIC Build A Transformative Digital Mindset 21. 5 2 TACTICAL Equip Wealth Managers for Success 22, 6 Conclusion Faced with the Need to Rebuild Cloud Based.
Platforms Are a Key Lever of Firms Digital Success 24. References 26, Disclaimer The information provided in this white paper is strictly for the convenience of our customers and is for general informational purposes. only Publication by Capgemini and Salesforce does not constitute an endorsement. Capgemini and Salesforce do not warrant the accuracy or completeness of any information text graphics links or other items contained within. this white paper Capgemini and Salesforce do not guarantee you will achieve any specific results if you follow any advice in the white paper It. may be advisable for you to consult with a professional such as a lawyer accountant architect business advisor or professional engineer to get. specific advice that applies to your specific situation. 2016 Capgemini and Salesforce All rights reserved Rightshore is a Capgemini trademark Salesforce Salesforce1 Sales Cloud Service. Cloud Marketing Cloud AppExchange Salesforce Platform and others are trademarks of Salesforce inc All other trademarks are the property. of their respective owners,Wealth Management the way we see it. Introduction, While global high net worth individual HNWI1 wealth is at an all time record and is up. over 70 since 2008 this wealth growth has coincided with decreased profitability. for wealth management firms, One of the biggest challenges for firms when addressing the revenue and profit. dilemma is to effectively leverage digital technology and the latest in cloud platforms. to transform their businesses For example our research shows that 46 5 of wealth. managers globally are not satisfied with the digital tools provided to them by their. firms The dynamic is compounded as the majority of HNWIs state they will leave. their wealth management firm for the lack of an integrated channel experience. Beyond just retaining existing HNW clients and wealth managers the ability to. leverage digital technology to attract new clients and revenue through data enabled. propositions for clients will be critical to firms profitability in the future. One of the most critical dimensions to building digital capability is the ability to. tap into new data possibilities and the rapid evolution of third party FinTech firms. to bring the best capability to clients Platforms such as those leveraging cloud. computing technology may offer firms immediate revenue generating possibilities. on top of wealth manager productivity and efficiency gains while also serving as. a future proof and scalable platform to keep up with the fast pace of technological. change especially the evolving FinTech ecosystem, HNWIs are defined as those having investable assets of US 1 million or more excluding primary residence collectibles consumables and consumer durables.
2 Exciting Times in the Global Wealth,Management Industry. If there is one thing 2 1 Record Levels of HNWI Population and Wealth. that can be said If there is one thing that can be said about the global HNWI population it is that they. are exceptionally resilient see Exhibit 1,about the global high. net worth individual Capgemini research identified the following pillars of the performance of the global. HNWI population since 2008,population it is that, they are exceptionally RECOVERY Global HNWI population and wealth was over 70 higher at year. end 2014 than year end 2008 the crisis low point for HNWI wealth representing. resilient almost 10 annual growth, CONSISTENCY The global HNWI population has grown every year since 2008. with only one year 2011 less than 7 annual growth, BALANCE All wealth bands showed strong growth with HNWIs in the US 1 30mn.
category growing the most at just over 72 over the 2008 2014 period. FORECAST Global HNWI wealth is forecast to cross US 70 trillion by 2017. growing by 7 7 annually from the end of 2014 This growth is expected to be led. by Asia Pacific which is forecasted to surpass North America in HNWI wealth. Exhibit 1 HNWI Investable Wealth Forecast by Region US Trillion 2008 2017F. 2014 2017F,Total 70 5 Global 7 7,1 70 Africa 5 8,2 72 Middle East 6 0. Total 56 4,Total 52 6 8 39 Latin America 3 1,HNWI Investable Wealth US Trillion. Total 46 2 1 34 2 28,Total 42 0 2 11,Total 42 7 1 25 7 66 16 52 Europe 8 4. 45 Total 39 0 1 15 1 81 7 70,1 01 1 65 1 67,Total 32 8 7 54 12 97. 0 84 7 07 12 39,30 1 40 10 90 19 91 North America 7 0.
Annualized,5 79 10 19 10 07,9 50 Growth,8 32 14 88. 11 64 11 37,9 06 21 21 Asia Pacific 10 3,14 20 15 82. 9 65 10 82 10 71 12 02,2008 2009 2010 2011 2012 2013 2014 2017F. Note Chart numbers may not add up due to rounding,Source Capgemini Financial Services Analysis 2016. 4 Wealth Management in the Digital Age,Wealth Management the way we see it.
In 2014 alone the top There have however been several winners and losers across markets see Exhibit 2. Looking at the top 25 markets by HNWI population representing over 90 of the. 12 U S metro areas global total we can see three clear categories of performance. added 1 trillion in On the one hand the winners include markets characterized by global financial centers. HNWI wealth helping Hong Kong Singapore key developing economies China India and commodity rich. to drive the 9 4 nations Norway Kuwait On the other hand those in the bottom of the growth race. are understandably nations that have struggled economically since the crisis with Latin. overall increase in the American and European nations the most prevalent In the middle is a true mix of markets. U S to a new record including the U S which is the largest wealth market at around 30 of the global total. of 15 2 trillion The U S has recovered well since the crisis especially given its significant size with. wealth creation concentrated in the 12 top metropolitan statistical areas MSAs. Since 2008 almost 23 of new HNWI wealth added globally has come from New. York Los Angeles Chicago Washington D C San Francisco Boston Houston. Philadelphia San Jose Dallas Detroit and Seattle In 2014 alone these 12 MSAs. added 1 trillion in HNWI wealth helping to drive the 9 4 overall increase in the U S. to a new record of 15 2 trillion,2 2 An Industry Marked by Disruption. While the rise in global HNWI population and wealth is an undoubted boon for wealth. management firms the industry is being disrupted by a variety of factors that are. re shaping firms profit dynamics and relatedly the competitive landscape of the industry. For instance wealth management firms are struggling to translate increased HNWI. wealth into profit While wealth is up significantly on 2008 levels the cost income. ratio of the industry has failed to recover having gone from around 62 in 2007 to. 84 4 in 2014 a highly concerning rise 3, Exhibit 2 HNWI Population and Wealth CAGRs4 for Top 25 Markets 2008 2014. Sample bubble 25 5 Wealth,Global Average,US 1Trillion China. HNWI Population 2008 14 CAGR,Taiwan India,Below average Japan Switzerland. growth cluster Norway,12 Netherlands,Global Average Austria Singapore.
9 3 France Fastest,8 South Korea growing cluster,Italy Russia. U K Canada Saudi Arabia,4 Argentina,Mexico Brazil Moderate. growth cluster,0 5 10 15 20,HNWI Wealth 2008 14 CAGR. Note Bubble size represents HNWI wealth in 2014,Source Capgemini Financial Services Analysis 2016. Key findings from Private Banking Benchmark 2015 Scorpio Partnership 2015. CAGR refers to compound annual growth rate which provides a measure of that constant rate of return over the time period. The causes are myriad though several stand out,Shifting HNWI Demographics and Demands.
The number and influence of younger HNWIs is increasing as they inherit wealth. and create wealth of their own impacting firms not prepared for their high levels. of tech savviness and expectations for the client experience. HNWIs are also holding significant amounts of their wealth in cash 25 6 5 and. other asset classes that are not profitable for firms. Increased Regulatory Pressure, The volume and pace of regulatory change has led to a significant increase in. costs spanning people documentation IT and infrastructure and opportunity. costs in addition to the penalty and reputational costs of non compliance and. constraints in delivering an integrated client experience. Wealth managers are spending more time on non value add activities related to. compliance impacting their ability to prospect and serve HNW clients. Entry of New Competitors, With increasing competition and investment performance transparency from. online brokerages combined with market turbulence wealth management firms. are challenged to differentiate their services beyond investment performance. Additional competition is now coming from FinTech players targeting different. aspects of the wealth management value chain, Firms are focused on these challenges in numerous ways though we see ten general. areas of focus in the coming 12 18 months 6, 1 Firms are increasingly building on their lending solutions and integrated. banking experience with an aim to drive growth and cater to the complex needs. 2 Wealth management firms are increasingly adopting a utility based model for their. middle and back office functions in order to optimize operations and reduce costs. 3 Identity thefts and personal financial crimes are increasing at a faster rate resulting. in higher spending on cyber security, 4 Wealth management firms are increasingly using cloud computing for non critical.
tools and applications to reduce infrastructure costs. 5 Enhanced used of technology by younger generations is leading to increased focus. on and investments in digital and self service capabilities by firms. 6 Wealth management firms are increasingly focusing on social impact advice as. social impact investments by HNWIs are gaining foothold across the globe. 7 Rise of automated advisors is leading to the emergence of new business models. 8 Firms are increasingly using predictive analytics to process the vast amounts of. structured and unstructured data with an aim to better understand their clients and. enhance client experience and loyalty, 9 Global wealth management players are reassessing their international. operations in the light of increasing regulations and challenges facing the industry. 10 Firms are investing in financial planning and advice tools as a means to. enable and empower wealth managers to provide personalized and relevant. recommendations and free up their time for value add activities. While the trends cover several areas a common theme underpins many of them. The importance of digital technology The next section looks at this in more detail. 2015 World Wealth Report Capgemini and RBC Wealth Management 2015. Top 10 Trends in Wealth Management in 2016 Capgemini 2016 https www capgemini com resources wealth management top 10 trends for 2016. 6 Wealth Management in the Digital Age,Wealth Management the way we see it. 3 The Future of Wealth Management,is Digital, The wealth management 3 1 Busting the Digital Myth. industry s digital maturity For years the wealth management industry has been resistant to transformative. lags behind the majority digital technology with several common reactions being used as an excuse for not. moving forward quickly We consider these myths and while the industry has begun. of other industries to accept that more needs to be done on digital the pace is still far too slow These. including those in financial myths are, services like insurance MYTH 1 HNWIs do not want digital tools just face to face contact. and retail banking The Reality While the direct relationship is important over a quarter of HNW. clients outright prefer digital contact to direct contact rising across regions and. age groups7, MYTH 2 Digital channels will cannibalize our business.
The Reality Not investing sufficiently in digital will result in client advisor and. asset loss to competitors,MYTH 3 Wealth managers will not use digital tools. The Reality Wealth managers are increasingly recognizing the value that digital. tools provide to deepen the relationship and facilitate flow of information such. as visualization on tablets see page 15, MYTH 4 True omni channel capability is too difficult. The Reality It is difficult but some firms are already part way through the. journey to 360 portfolio views and data analytics, MYTH 5 It is a low priority compared to other issues. The Reality Around 56 of firms have digital as a top three priority for the. short term and almost 69 have it as top three priority over the medium term 8. Understand demand for digital technology in wealth management as well as cloud based solutions for firms to transform their businesses Wealth Management in the Digital Age XX O 6 s Z Os O6x Table of Contents 1 Introduction 3 2 Exciting Times in the Global Wealth Management Industry 4 2 1 Record Levels of HNWI Population and Wealth 4 2 2 An Industry Marked by Disruption 5 3 The

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