Reimagining wealth management to thrive in the new normal
Asia’s wealth management landscape is changing dramatically. Shifting customer preferences, new competitive and regulatory trends, innovative digital-led business models are all coming together in a perfect storm, creating a ‘new normal’ for wealth management, and its consumers and advisors.
This mutating Alice in Borderland-esque (no spoilers ahead!) world offers new opportunities for every wealth management player. But every innovation has a shelf life. What was once considered to be “rewriting the playbook” is now table stakes at best. Democratised access, goals-based portfolio advisory and execution and omni-channel hybrid interactions – these once provided differentiation but are now facing commoditisation.
This is why it will take a complete reimagining of digital wealth management to thrive in the not-so-distant future.
The future, summed up in a few short sentences, looks like this: The future is green. The future is personal. The future is decentralised. Value propositions will have to evolve, interaction models will need to be revisited and business models will need to be reinvented to succeed.
Allow me to expand further on those points.
The future is green.
In a world where temperatures rise dangerously by 3 degrees Celcius, melting ice will no longer be a hot topic (pun intended). As the climate emergency becomes more urgent, and the outcomes become increasingly catastrophic, we are seeing the emergence of young investors who are socially responsible and are keen to invest in companies that not only do ‘well’, but also do ‘good’.
Financial services providers are on the hook. They will need to conduct ESG integrations for their bite-sized investment offerings and overlay this with a standardised product classification framework. Further, they will have to participate in building a strengthened carbon market that lays the foundation for carbon taxonomy and paves the way for an exchange of credible carbon credits.
Sustainability is a big play for OCBC Bank. We have enabled new products like the Impact Investing portfolio on our robo-advisory platform to support our customers’ demands for ESG offerings. This top-performing portfolio attracts capital quarter-on-quarter across diverse demographic profiles. We are also in the midst of enhancing our sustainability investment framework, integrating ESG considerations with our full suite of wealth offerings and embedding impact dashboards for our investors.
Bottom line: Sustainability needs to be embraced in all ways – now, not later.
The future is personal
Expectations of modern investors around personalised advice – coupled with an explosive growth in data creation, capture and replication – is leading to the emergence of hyper-personalisation as the essential differentiator for wealth management players.
Across the financial wellness value chain for both human and digital interactions, wealth management providers have the opportunity to leverage artificial intelligence and algorithmic individualization to offer hyper-personalised engagement.
At OCBC Bank, the ability to leverage machine learning and artificial intelligence over rich data helps us to provide clients with personalised choices and predictive suggestions based on their preferences surrounding portfolio holdings, risk profiles and investment behaviours. This underpins our three-step digital wealth management journey anchored around Discover, Decide & Review.
Hyper-personalisation you could say, is the new black.
The future is decentralised
In the era of meme coins commanding US$100+ billion in market cap, what are known as ‘Digital Assets’ are often misunderstood as a buzzword associated with cryptocurrency.
But digital assets and its tech offspring (NFTs, smart contracts and more), further enabled by blockchain, are starting to create new markets for assets that were traditionally illiquid. Plus, tokenisation is lowering the barriers with fractionalized digital assets and introducing game-changing opportunities for cross-border transactions.
OCBC Bank is actively exploring partnership opportunities with players in the digital assets landscape, especially as digital assets will be mainstreamed into the financial ecosystem before we know it. This in turn will create new growth opportunities and revenue streams for banks.
As Shibuki in Alice in Borderland puts it: “If you don’t want to die, you will have to keep playing the games”.
Likewise, winners in the digital wealth management space will have to keep playing at an intersection of technology, product innovation and sustainability to ride the next wave of disruption in digital wealth management.
Contributed by Aditya Gupta, Head of Digital Business and Transformation, OCBC Bank
This article was initially published in The Business Times on 8 November 2021.