The world of wealth management is changing, and the future of the industry may be nearly unrecognizable. Artificial intelligence and automation are becoming increasingly ubiquitous, and the needs of customers are changing drastically. This shifting landscape should offer immense opportunities for those willing to go with the flow – but could cripple companies that refuse to adapt.
A 2016 study by professional services firm PwC concludes that of the industries in the financial sector, wealth management is the most unprepared for the coming changes.
The study found that even though the sector is one of the most vulnerable to FinTech disruption, leaders within the industry are among the most lax when it comes to preparing for future disruption, with 17 percent believing that FinTech poses no risk to their industry.
But unfortunately for that 17 percent, wealth management is one of the most prone industries to FinTech disruption, according to the PWC report. If industry leaders are to not only avoid the disruption but make the most of it, they need to forge collaborations with FinTech companies, says PwC.
Collaborations between startups and big corporations are becoming increasingly common. “It’s a strategic imperative,” says Aline Santos, executive vice president at Unilever, in a white paper entitled “The State of Innovation”, released in late 2017. “Startups are now widely recognized as invaluable sources of innovation, fueling growth and providing pioneering business solutions.” And that’s a trend that’s likely to be relevant in the wealth management space in years to coming, according to PwC. The professional services network company says that by combining with FinTech startups, incumbent asset and wealth managers can expect to see cost reductions and additional revenue, as well as IT security solutions, thanks to their tech-savvy collaborators.
As the industry landscape continues to shift, it seems likely that only companies capable of quickly adapting to changing customer needs will be able to survive, and in order to do so, collaboration with new entrants will not only be expected, but necessary.