In the coming years, we will see more data-led insights bringing in hyper-personalisation
Traditionally, the wealth management industry has always focused on giving doorstep services for comprehensive financial and banking solutions to the well-heeled, through well-informed and well-spoken advisors who form the heart of the business. In fact, there were fewer takers for digital advisory solutions, often deemed as impersonal by the conventional upper-crest but fancied more by young or resource-challenged clients.
However, the scenario has changed significantly, especially in the last decade or so, due to a few key reasons; firstly, new entrants in the wealth management space saw many first-generation entrepreneurs with high digital acumen and senior professionals with paucity of time. Additionally, Covid-19 led to the existing client’s exposure to be extremely efficient and easy “on your fingertips” services, making them natural converts to digital ways and means. Coupled with this, there was a rush of wealth-tech firms in India, pushing technology to the forefront and hastening the digital transformation journeys. Incredibly, what was achieved over the last three years would have taken – otherwise – a decade or even more, in a conventional growth scenario.
With the industry surveys hinting at a sustained 10% growth per annum from now on, financial wealth in India would reach $5.5 trillion by 2025, driven by digitally savvy affluent and mass-affluent investors who might consider advisory services through overwhelmingly digital channels and other intelligent tech solutions, or hybrid means that would comfort them to an extent.
A four-pronged strategy: Reimagining both the internal and external client journeys with the goal of enhancing productivity, efficiency, and accountability, leads to a much sharper end-user experience. a) Going paperless in customer onboarding and servicing; b) Building DIY solutions; c) Reinventing customer front-end platforms to make them simple and intuitive; and d) Leveraging data in driving the business. To supplement our efforts, the regulators also brought in multiple, enabling solutions such as KYC repositories, Aadhaar based eSign and eStamping journeys, OTP based consent mechanisms among others to expedite the adoption of digitization. These eventually boosted the bottom line, resulted in higher revenues and lower costs due to efficiencies, and strengthened customer advocacy.
Needless to say, bringing in digital solutions for the UHNI segment had its own set of challenges and required a different approach from the retail segment. Firstly, considering the sheer value of transactions and the criticality of market timing, the risks involved – for both the customer and wealth managers – were significantly higher. Secondly, by and large, this clientele was used to an assisted mode of servicing and hence did not appreciate DIY solutions. Thus, it was paramount to build solutions, keeping all three vectors – technology, customer experience, and risk – in mind. Data played a big role in bringing all together by generating insights which helped navigate this combination.
Long, rich experience sharpens customer centricity: Having over 20 years of experience in this customer segment, Kotak understood these nuances and has thus far focused on building multiple solutions to simplify customer experience. Whether it is biometric-based customer onboarding, eSign, and OTP-based customer servicing or AI and robotics-based automation – the focus has been to make the customer’s life simpler. Even on the common digital platforms, the user interface and limits are aligned as per the needs of the UHNI segment. At the same time, multiple internal controls – like maker checker set-ups with a step-up authentication integrated with the right approval matrix – keep the risks manageable. The right mix of convenience, experience, security, and compliance have been overriding factors in building all digital solutions.
Lofty digital challenges of the UHNI segment: Since the myths pertaining to the UHNI segments have been demystified over the last few years, it is imperative for wealth managers to have the digital solutions – alive and fully functional, rather than focusing on the greater adoption of the same. Unlike the retail segment, where a pure D2C approach plays a key role in ensuring digital adoption, this segment requires front-end relationship teams to be digitally dexterous. It, thus, becomes important for firms to drive a culture of digital nativity. This requires companies to challenge the status quo, cannibalize their businesses, and be open to changing customer conversations, going beyond investments and markets.
In the coming years, we will see more data-led insights bringing in hyper-personalization, deeply understanding the customer sentiments and investment behaviours besides helping wealth managers to anticipate market trends and optimize customer portfolios to outperform peers. There will be a higher adoption of collaborative tools, powered by AI, making wealth management firms available 24×7 to customers, regardless of geographical constraints. While a wealth manager will remain pivotal in maintaining the relationships, the sheer quality of the interaction will significantly change as knowledge sharing and servicing will become far simplified by the intervening digital solutions. On their part, companies will make continuous investments in strengthening cyber security to mitigate the ever-increasing risks.
Academic, George Westerman of the MIT Sloan Initiative on the Digital Economy once said,” When digital transformation is done right, it’s like a caterpillar turning into a butterfly, but when done wrong, all you have is a really fast caterpillar.” For wealth managers, the digital transformation journey needs to be both technologically synchronised and execution-wise flawless to thrive in the changing competitive landscape.
(The article is attributed to Samira Bhargava, Business Head-Customer Experience & Digital- Kotak Private Banking, Kotak Mahindra Bank Ltd.)
