Not to belabor the point
Well, maybe I want to belabor it a little bit. If you have made it this far, then congratulations, yes this is another blog about how important customer experience is in Financial Services, so why do I feel the need to write another one?
Well, not everyone seems to have gotten the memo yet, particularly in the area where I want to focus on Wealth Management, this is very much a follow up to my Are You Ready for Millennial Money? blog.
It is, however, not just millennials that get annoyed about poor digital customer experience or the lack thereof entirely. The banking world has provided a digital proposition for several years now with many giving an excellent customer experience that rivals their Fintech counterparts. It is not the case though for the bulk of private wealth managers who have predominantly rested heavily on their ‘strong relationships’ with clients being their protection from having to digitize parts of how they interact with their customers.
It does not matter what your customer base looks like, online banking has set the precedent – even my Grandmother has yielded and is signing up for online banking much to my parents’ behest. The argument of private wealth customers once not having a desire to interact with their wealth manager outside of face to face interaction was perhaps once valid but it certainly isn’t now.
Change is coming – again and again
The banking world has laid down the mantle and Wealth Management has to either accept the challenge or be left behind (read cease to exist). Interestingly in further support of this, according to an Ernst & Young survey, it’s not the mass affluent market (which I certainly assumed it would be) that has the biggest desire for digitization but the high-net-worth individual (HNWI). If HNWI wants it and you don’t have it, guess what? That high-net-worth goes elsewhere and your AUM goes down.
Add now we’re also looking at the advent of competition – something that until relatively recently wasn’t there. Competition in the world of face-to-face interactions was along the lines of “who do I get on better with”? Whoever was nicer, more charming got the business and the 2% fee.
This isn’t the case anymore as more Fintech players enter the wealth management space using algorithms to bring their cost down, enabling them to charge 0.5% while delivering similar returns. Combine this with the generational wealth transfer we’re approaching (again see Millenial Money Blog) then there is no room for error.
Your customer experience has to be at the top of the game for a new customer to justify paying 1.5% for potentially the same result as a cheaper FinTech “because my parents know them” is no longer a deciding factor.
Can your customers access all of the information they want whenever they want on whatever device they want? If not, they’ll find a firm that does.
The bulk of what we have been discussing is about private customers but why should it stop at individual customers? What because I’m an institution I want an outdated laborious COBOL written system with 45 pages to fill out that I can’t save to be my interface? No, I don’t!
By the same token why can’t I have an app to see my pension, just because I’m in the company scheme (this bits mainly for European folks) I don’t want to see where my salary disappears off to each month? Or choose which funds it’s invested in? Or set my risk profile? Spoiler alert, I do. I’m not saying that those things aren’t possible but come on who has the time to either sit on hold to the scheme administrator or work out how to log in to their online portal only to find out you can’t do anything with it or you don’t have all the information you need?
What’s the bottom line?
Get competitive in the customer experience game or be prepared to fade into the past. Those really are your only two options.
The choice isn’t hard, well it doesn’t have to be.