Digital transformation is no longer just a buzzword post the COVID-19 pandemic with a large majority of industries adopting technology as part of their business continuity planning. Like every other industry, the wealth management industry also is adopting modern technologies, albeit a little late. In an interview with Dataquest, Uday Chaudhari, senior director – technology, Synechron provides percipient details on the challenges faced by the wealth management industry and how technology is redefining the industry.
DQ: Why is Wealth Management the latest financial service to embrace technology?
Uday Chaudhari: Wealth Management industry in India is gradually adapting itself to grow digitally and deal with changing consumer needs. The change in expectations is creating disruption in the structure, role, and competitive environment in the sector. The post-pandemic strategies are coming into play; industry players are redeveloping themselves to set new business models that would accelerate the pace of technological advancements and introduce creative methods to address customers’ expectations. The wealth management industry is making many digital breakthroughs, which has led to reduced costs, increased profitability, and better customer outreach. McKinsey reports that the adoption of technology in BFSI sector is projected to reduce operating costs by around 30-40% across domains. In order to stay competitive, wealth management players are necessitated to evolve as the current customers have many options to choose from. Hence, assets management companies are requiredto be updated, upgraded and build strong relationships with their customers. While this change is rather recent, it is happening rapidly across asset and wealth management industries with the help oftechnologies like automation, AI, and analytics.
DQ: What are some of the common challenges faced by the wealth management and asset management industries?
Uday Chaudhari: Data explosion is a persistent challenge for this sector given its data dependent nature. Irrespective of the operating model, there is a need for data integration and creating a framework for sourcing, validating, and reporting data that is created. Data explosion has made it challenging to analyse data and create actionable insights for decision making. It is challenging to manage digital assets, there is a lack of uniformity and mainstream platform to show ESG score. Investors are struggling to assess property performance and facing high risks and associated costs which can lead to covenant violation. Here’s where InvestTech Accelerator comes in which can be applied and prove beneficial for specific use cases in the financial sector.
Another important aspect to deal with is security. A report by Data Security Council of India (DSCI) and PayPal India has suggested that although the digital financial space has seen significant growth, the number of fraud cases have also seen a rise with fraudulent claims, chargebacks, fake buyer accounts, promotion/coupon abuse, account takeover, etc. Blockchain technology emerges as a prominent solution for this problem.
The recent changes have brought volatility in the wealth management industry. Emerging challenges such as changing business models, disruption in the fintech sector, managing increased client expectations, and revenue compression pressures are some of them.Through our range of InvestTech Accelerators, we want to address these issues and empower leaders in the asset management space across client’s front, back office, and support functions.
DQ: What are some of the ways to sync Design, AI, Automation and Analytics and Engineering into the client-service process?
Uday Chaudhari: AI and automation seem to be at the peak in the digitisation phase; companies across sectors are making these an integral part of their growth strategy all over the globe. BFSI sector, even though was a late bloomer, started deploying these technologies to be relevant in the world of digital transformation. The BFSI sector has always prioritized customer interaction. Creative use of AI and automation may unlock incremental value for asset managers. AI analytics can help them to be omnipresent, give personalized experiences for clients, and generate increased profits. A survey by Fidelity Research Institute suggests that more than two-thirds of institutional investors felt they would be relying on AI for monitoring, evaluating manager and portfolio performance and risk by 2025.Many institutional investors are already acting on their convictions about AI, they are either currently testing or have already begun integrating AI into their decision-making processes.
DQ: How does Synechron’s new accelerator program help in solving the prevailing issues?
Uday Chaudhari: Synechron’s recently launched accelerator program, InvestTech, is built for the investment management and asset management sector of the financial services industry. This is our eighth accelerator program launched overthe last five years. It offers real-world solutions to meet the growing demands of the institutional investment management industry and addresses their pain points.
These accelerators are innovated and developed by experts at Synechron’s Financial Innovation Labs (FinLabs). At these FinLabs, we bring together the latest hardware and software to help clients reach their potential with the help of technology and apply it to domain specific financial services and insurance use cases.
As the buy-side is evolving, the financial sector has limited time to fulfil those changing expectations. We believethe global investment and asset management players have the potential to transform their business models to helpourcustomers stay ahead of competition. With InvestTech, we have tried to build a future-forward solution along with their R&D team and key investment industry firms’ leaders. The new suite of InvestTech Accelerator solutions includes the following:
- ESG Booster: Provides a fresh way to “score” Environmental, Social & Governance (ESG) portfolios and individual companies based upon multiple external data and inputs and can recommend alternative component companies for enhanced ESG scores and performance
- WillPower solution: Safeguards the digital assets, documents/records/videos necessary for an easier estate planning process by providing a blockchain-led centralized digital safe deposit box and to facilitate inheritance of digital assets
- Digital Compliance: Enables the automatic intake of all new and changing detailed regulatory promulgations and mandates applicable to the investment/asset management industry and enables customization for compliance professionals to work smarter and faster
- VisualRE tool: Provides a comprehensive predictive analysis model of real estate funds, commercial real estate properties and Real Estate Investment Trust (REIT) securities, for possible external stresses and tenant/property owner defaults based upon the ingestion of data across varied sources
- 360+: Provides a dashboard-presented holistic 360-degree picture of each customer and their portfolio based upon individual preferences and behavioural patterns, and allows better targeting of investment products/services
All our accelerator programs have been highly adopted and appreciated by BFSI leaders across the globe and with each launch, we try not only to mitigate the issues the industry is facing but also help to anticipate complexities so that companies canstay ahead of time, and adapt new technologies that would be a gamechanger in the way they operate.