January 12, 2017

Rethink the business process and capture the opportunities with robo advisory

Maria Kumle

Head of New Solutions, Tieto, PHCW

Where are the earning possibilities for the financial institutes when the wealth management and advisory is being disrupted globally?

Millennials are more excited about receiving new offerings in financial services from companies such as Amazon rather than their banks. At the same time, legislations are pressing margins, new players are entering the field and the Nordics are lagging behind compared to America and Australia. These challenges highlight the need for banks and financial institutions to rethink their business process in order to capture the new opportunities.

Here are two main solutions going forward:

1. Catching up and going further than automatization

The fund portfolios linked to pension schemes are already highly automated in the Nordics; the advice situation is placed in the selection of an appropriate pension product (if a choice is possible), the following processing with rebalancing and savings agreements often is automated.

The next step for banks and financial intuitions is to become relevant in the eyes of the next generation of investors as the hub for their life management. This means providing robotics in terms of tools and support, “bots”, analytics, artificial intelligence, virtual reality, augmented reality, big data, procedural development etcetera.

2. Identifying new earning streams

By simply automating the existing business processes in the advisory and wealth management area, the cost issue is addressed, and traditional tools can be used to spread the word to a larger group. By automating and adding analytics in terms of advice construction to support the advisors it is possible to meet challenges with consistency and regulations.

Several new earning streams become apparent. The services of a robo guide are not free of charge, so for starters in just by providing the tools there is an earning stream. In addition there will be the traditional instruments and products, however, the earnings per transaction will be lower. The traditional financial institutes will need to adopt in to new types of companies as well, incorporating crowd funding projects, community thinking and services.

In all this, automation and self-service by the investor is a must, otherwise the earnings will be too low, and sharing the utilities in the eco system is another key enabler for the providers of today to survive in the future. New values will need to be added, but in order to understand the value needed, the institutes must be prepared to open up for sharing and change.

- - -

Read also my other blogs Dawn of the second generation robo guides and Three challenges that show why you need to embrace robo advisory.

In the next blog post of this series on robo advisory, I will dig deeper into which products that are necessary. I will also let you know what Tieto can do to help you gain as much as possible during the very exciting upcoming years.

Stay up-to-date

Get all the latest blogs sent you now!