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Wealth management is facing an important set of changes, mainly dictated by the need to renew the customer experience and having to deal with a market that is constantly evolving, while still following a tradition that focuses on a highly personalized service model and a wide range of financial products. In addition, technologies and socio-economic dynamics are pushing Wealth directorates to also open up their offerings to broader customer targets, such as Affluent and Upper Affluent.
The results of the research Cetif of 2022 show how advisors are the main channel for carrying out most of the Wealth activities and processes. An advisory network that is still predominantly male (71%), composed of typically specialized practitioners (84%) and with a high average age (34% are over 58).
However, the advisory channel is not the only one available to customers, who increasingly prefer to operate on digital channels, such as Mobile App and Web Banking. For the latter, the area dedicated to Wealth management is usually placed within institutional websites(in 70% of cases), on the other hand, there are few dedicated sites, offered especially by specialized institutions. For the Mobile App, on the other hand, there is a dedicated area within the institutional App in 40% of cases, while only 20% of Institutions have a specific app designed for Wealth customers.
In recent times, institutions have been trying to improve and optimize the tools available to the network, beginning to invest overwhelmingly in Robo4Advisory as well, rather than in interventions to improve and overhaul control processes, or in projects to reduce operating costs.
In fact, over the next 3 years, investments in digitization, directed toward the development of AI tools and advanced data analysis systems, will increase the most. In particular, the industry is looking to introduce Artificial Intelligence (AI) tools to simplify advisor operations. If, on the other hand, the horizon shifts to 2026, Wealth Management's estimates speak of investments in projects that have, on the one hand, blockchain as an enabling technology, thus tokens and crypto-assets, and, on the other hand, the Metaverse, which can be used to expand the segment's business models, as well as to reach a new customer base.
Robotic Process Automation (RPA) are also important tools for those in this sector to invest in, especially for the workflow efficiencies their use can bring. Specifically, in 2021, almost exclusively "Rule based" RPAs were widely used, while the evolved ones, supported by AI, are still too little used, although significant growth is estimated during this biennium.
The digitization process is also underway in customer knowledge and segmentation, with the market increasingly integrating new data sources from outside the market. For example, 42 percent of institutions say they use external data sources, whether from big data or Open Banking .
Regarding the development of digital Wealth projects, the in-house mode prevails. In fact, the customer experience, processes and service model are the added value of institutions that distribute financial products and are strongly affected by the personalization strategies adopted, so in-house development is generally preferable. This could be asserted as one of the phenomena that may have caused the sharp slowdown of the Italian WealthTech market during 2022, whose number of new companies, compared to the previous year decreased by 50 percent. Despite this, there are still a large number of startups active in the sector, 42% of which, however, are in an Early stage of growth. In contrast, 58 percent are currently in the Growth stage, a symptom of the fact that most of the existing realities have managed to overcome the conceptualization and startup stages, heading toward a more structured stage.
In conclusion, it is observed that the Wealth management sector is at the center of a process of strong renewal: digital is progressively leading the system to be more efficient and sustainable, as well as to greater levels of "democratization" of products and services, which are being made available to new segments of customers. Business, on the other hand, which today is strongly relationship- and product-focused, will transform into an increasingly data-driven business, where value-for-money is represented by (mass) personalization of service.
Edited by the team Cetif Research
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