The race to reshape wealth management business models is on

Together, these forces mean new and different business models would be needed for firms to tap into the next level of industry growth. And the recent round of first-half financial results for this year indicates that some front-runners might already be pulling away from the pack.

How? By having started to adapt their business models in several key areas. One is through creating a better digital client experience, supported by greater use of data and insights–powered by technologies like analytics and AI–to engage clients more personally. Another is developing innovative products and solutions, often by using ESG and positive social impact investing to attract new and retain existing clients.

But the changes being made by some industry players in business model transformation go further and deeper. As well as digitising and better integrating their client-facing front ends, they’re also rethinking and ‘cloudifying’ their back-office platforms aiming to make their operations lower-cost and more flexible. And they’re collaborating with an expanding ecosystem of partners – including FinTechs – to provide the products and experiences that their clients want.

It all adds up to a massive retooling of the business at unprecedented speed. And the firms in the vanguard are aiming to deliver it through a new approach to organisational change and transformation: one that involves on the technology side moving away from traditional bespoke development methods, and towards a more agile approaches focused more on using proven, standardised components to maximise speed and flexibility.

The final business-critical piece of the jigsaw? People, of course. In combination with the workforce changes triggered by COVID-19, which has driven remote interaction between advisors and clients, wealth managers are now reviewing and reshaping their talent strategies to better align with the post COVID era shift towards new hybrid interaction models which are a mix of remote and face to face business models.

And we’re already starting to see some firms going even further, tackling the next frontier to move towards the wealth manager of the future. This means for us taking automation and digitisation to new levels to create next-generation of business models—characterised by highly integrated front ends that enhance client interactions and value still further to drive differentiation and growth.

This drive to build the future also includes gaining new capabilities via a blend of internal innovation and inorganic expansion through M&A, joint ventures and ecosystem partnerships.

Today, as the race to transform wealth management business models is on, we’re seeing initial leaders emerge. But it’s all early days – and there’s everything still to play for as the evolution further gains pace and scale. For the firms now looking to close the gap, the good news is that the initial success of some players has highlighted the need to focus on the key areas that will determine future success and new approaches to transform.

The pace of change is only going to increase in the future – and the longer you wait, the bigger the gaps you’ll have to close.