The digitalization of wealth management improves the client experience
THE Covid-19 pandemic has caused major disruptions in many aspects of life with social distancing, contact restrictions, lockdowns, border closures as well as new ways of working. However, one positive trend we have witnessed is the acceleration of digital transformation in industries in Malaysia and the rest of the world.
With close contact restricted or strongly discouraged during the public health crisis, businesses have begun to adopt innovative solutions to ensure business continuity and, most importantly, uninterrupted customer service. We have seen the emergence of digital collaboration and the use of technology in all areas of business, from operations to sales and marketing. After the pandemic, the digitization of businesses and industries will continue to progress, as it has now become an integral and beneficial part of work and life.
The financial services sector has evolved and welcomed innovation in the form of digital banks, which will help improve financial inclusion in Malaysia. In April this year, Bank Negara Malaysia (BNM) awarded digital banking licenses to five consortia, marking a new era for financial services in the country. The move will heighten competition among traditional banks as digital-only fintech companies join the race to offer financial services to customers in Malaysia. It is imperative that traditional banking institutions focus more on digitizing their solutions, including advisory services that require regular interaction with customers, to stay ahead of the game.
Increased efficiency and new customer segments
The digitalization of wealth management solutions is forcing banks to better understand the needs of customers today, especially around criteria such as convenience and control. Clients want instant access to their wealth and investment portfolios, a clear and comprehensive view of performance data as well as real-time price movements. With digitized wealth management solutions, banks can streamline their operations, manage multiple complex wealth management programs from a single app, and provide consistent advice across all digital channels.
Avaloq, a subsidiary of NEC and a Swiss provider of digital banking solutions, supports the digital transformation of wealth management and helps banks offer secure, personalized and inclusive financial services to their customers in Malaysia and around the world.
Today, traditional wealth management advice is almost exclusively offered to high net worth individuals. Through digitalization, Avaloq is democratizing access to wealth management to provide high-end financial advice and services to affluent investors. This opens up a very attractive segment of new clients for banks and wealth managers in Malaysia.
The power of artificial intelligence
The digitization of wealth management goes beyond digital platforms and channels. For example, when a bank digitizes its wealth management solutions, it can use artificial intelligence (AI), big data, and analytics technology to uncover a client’s interests, investment patterns, and behavior. . These contribute to the hyper-personalization of services and solutions, while building trust and lasting relationships with customers.
Avaloq, for example, is using AI to help banks and wealth managers tap into the trend towards conversational banking – an innovative approach to relationship management based on instant communication on social messaging services. Avaloq’s AI-powered virtual assistant uses natural language processing to understand customer intent to prompt advisors to take the best action, enabling them to deliver highly personalized service to a greater number of clients.
In short, hyper-personalization enables banks and wealth managers to better meet their clients’ expectations, while the fundamentals of behavioral science, advanced analytics and AI can provide advisors with insights assets and investment recommendations.
The future of wealth management
As society digitalizes and business increasingly takes place online, there are undoubtedly data privacy risks as well as cyberattacks. For banks, cybersecurity is a key business priority and is key to building trust with customers. To get the most out of digital analytics and technology, banks need to be constantly vigilant, keep a close eye on potential cyber threats, and keep their cybersecurity policies up to date. Encouragingly, at NEC, we have noticed improvements in cybersecurity in the financial sector.
With proper cybersecurity measures in place, the benefits of digitization far outweigh the risks. The digitization of wealth management provides efficiency, improved productivity, real-time updates and profitability for banks. Over the next five years, Malaysia will see more digitalization, especially in the financial sector. In January this year, BNM announced the launch of the country’s five-year financial sector plan, which identified five strategic pillars that will propel the digitalization of Malaysia’s financial sector. For banks and wealth managers to take full advantage of this vision, they must embrace a culture of digital innovation in investment and wealth management.
This article was written by Managing Director of NEC Corp Malaysia, Chong Kai Wooi (image).