Pandemic accelerates need for ecosystem collaboration
The pandemic has put the spotlight on digitalization. So has the unprecedented surge in earnings of big tech companies like Amazon, proving that digital innovation pays off. The disruptive force of the pandemic caused staggering adoption rates of digital tools and boosted online sales. Consumer habits are shifting. Engaging and interacting digitally has become the “new normal”.
Digitalization trends accelerated by the pandemic also have an impact on wealth managers. Financial services firms with digital-first business strategies are reaping the gains, while others—only just coming to terms with the transforming force of a pandemic-driven technology boost—have seen client engagement drop.
Numerous consultancies and research firms are venturing forecasts of the short- and long-term impact of pandemic-associated digitalization trends on wealth managers. One of these is Business Insider. In an article summarizing the main insights of an “Insider Intelligence” report on the US Wealth Management Ecosystem 2021, it claims that the pandemic has accelerated the need for digitalized offerings and that ignoring these emerging trends can be risky. In fact, as the article states, more than three quarters of financial advisors in the US and Canada reported loss of business because they could not keep up with pandemic-driven change.
An increasingly common trend to mitigate this risk is to partner with third-party providers. Start-up entrances into the financial services industry, known as fintech or wealthtech, happened well before the pandemic. By creating new customer-centric ways of delivering financial services and engaging with clients, they have been spurring digital transformation ever since. The report lists Adviscent’s Interactive Advisor as “illustrative” as one of these innovative tools that are reshaping the industry.
Partnering with fintech, also called “ecosystem collaboration”, is not only a quick win. It can be a big opportunity for traditional wealth management businesses. According to the Insider Intelligence report, 85% of wealth management firms are considering such an operating model within the next twelve to eighteen months.
Examples that made the headlines are Vanguard and Ant Financial’s joint venture announcement last year or Canadian Marksman Asset Management’s collaboration with Pascal Financial. Another report that suggesting ecosystem collaboration as a future trend is Capgemini’s report Top Trends in Wealth Management: 2021.
View one of Adviscent’s clients explain why they decided to adopt Adviscent’s Interactive Advisor in a video interview.