Spend on IT by Wealth Management Segment

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<strong>London &mdash; Oct. 31</strong><br />The mass affluent market remains a growth opportunity for the banking sector as the asset base of typical investors expands. A new report by independent market analyst Datamonitor, &ldquo;Building a Technology Platform for the Ultimate Offering &mdash; Retail Banking Technology&rdquo;, predicts spending by financial services firms on front-to-back wealth management IT in North America, Europe and Asia-Pacific will reach $28.5 billion by 2012, as they increase investment in the technology to cope with market regulations and stay competitive. For technology vendors, opportunities are not restricted to the private banking industry alone but also extend to retail banks, insurance providers, independent financial advisors, retail asset managers and retail brokerage houses.<br /> <br />The emergence of a wealthy and especially mass affluent segment is fueling growth in new services and distribution options, which will require a more sophisticated approach to technology. &ldquo;Wealth managers, private bankers and retail banks are no longer talking of stand-alone strategies for wealthy individuals&rdquo;, says Jaroslaw Knapik, financial services technology analyst with Datamonitor and author of the study. &ldquo;The trend is towards &lsquo;integrated financial solutions,&rsquo; revolving around cross-selling banking, savings and investment products wrapped with advice.&rdquo;<br /> <br />Front and middle office technology becomes a competitive differentiator<br /> <br />Effective front and middle office tools, such as portfolio management, financial planning and analytical customer relationship management systems (CRM), lie at the heart of wealth management operations. Clients, particularly the more active &lsquo;new money&rsquo; segment, are demanding a more hands-on approach from their relationship managers. This creates a need for advisors and front office staff to have access to more agile, automated analytical tools and presence technologies that enable client interactions to be more effective from a cost and time perspective.<br /> <br />As wealth managers seek greater competitive differentiation, they will look to develop an &ldquo;ideal&rdquo; service model. &ldquo;The Ultimate Offering, an architecture comprised of seamlessly interconnected, service oriented (SOA) architecture-enabled components combined with underlying business intelligence (BI)and analytical CRM components, is emerging as the IT model in wealth management.&rdquo;<br /> <br />Well developed multichannel features lay a foundation for effective distribution<br /> <br />A key priority within distribution channels will be continuous delivery of high-quality face-to-face advice while providing customers with Internet-based transactional capabilities in tandem. Retail banks looking to target this group are extending their offering beyond traditional retail banking services: more product building, stronger and multichannel customer and advisor service options and deeper understanding of customer data.<br /> <br />The presentation of data has always been among the top priorities of wealth managers, as data reporting often determines whether a client will stay with the company. However, increasing pressure to reduce cost is causing focus to shift to back-office improvements, such as infrastructure and governance. As such, the combination of increasing competition, growing technological sophistication and an expanding mass affluent market, is driving wealth managers to enhance their data management practices.<br /> <br />Financial institutions are responding to the growing need for more automated and real-time back-office systems that are compliant with growing regulatory pressures. As a result, wealth mangers are turning to packaged core systems as a means of reaching these goals.<br /> <br />Knapik concludes, &ldquo;Understanding of the Ultimate Offering will be crucial for internal IT departments as well as for technology vendors and integrators in order to properly align the existing technology stack with business needs and to design and further upgrade or develop componentized wealth management software platforms and IT infrastructure.&rdquo;<br />

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