Technology innovations are certainly the hot topic in the wealth management and private banking industry amidst the fear of digital disruption and the need to engage millennials. Huw Thompson, business development director for wealth management services at Equiniti, discusses the technology trends in the wealth industry. John Schaffer reports
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Eqiniti is a business process outsourcing (BPO) company that provides wealth management services to financial institutions, wealth managers and the retail stock broking market. The UK headquartered firm is a share registration business that provides services to around half of the FTSE 100 companies. The company provides full front to back technology platforms which includes a trading platform called share view dealing that is based upon the EQ Zanite platform. Equiniti currently has seven wealth management and private banking firms amongst its client base, including robo-advisor, Money on Toast.
Huw Thompson, business development director for wealth management services at Equiniti, joined the company in 2014 having previously worked for TD Wealth Institutional as business development manager.
Thompson promotes the benefits of outsourcing technology infrastructure for financial institutions:
"The cost of technology is very close to the cost of maintaining solid risk management services. But for a firm choosing to outsource, they are able to take all of these different issues and move them to a BPO business like Equiniti who maintain their own technology, gain massive economies of scale and de-risk through management of compliance issues."
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By GlobalDataThompson says that Equiniti’s technology proposition is designed on the basis of an "open architecture" platform, allowing firms to tailor their systems to their own requirements. He says:
"In an abstract way, we are a car engine manufacturer. We build and define an engine which you can then build a skin around. The bodywork and the kit define what the car is and what it does.
"The aspiration here is to provide a fully functioning, flexible open architecture platform for people to develop their own proposition upon."
Thompson says that the financial services industry has much to learn from the retail sector in terms of client engagement and utilising customer data in an efficient manner:
"If you take examples from the likes of Amazon, you can access Amazon from any device, anywhere in the world. They know an awful lot about their customers and use things like relational databases in the background alongside statistical analysis to work out what people are likely to do in the future."
The rise of robo-advisory services such as Nutmeg, have proven to be a concern for the traditional incumbents in the wealth management and private banking industry. Thompson feels that although this technology innovation will attract some clients from the high net worth (HNW) and mass affluent segment, there will still be a need for personal interactions to deal with more complex matters that surround the wealthy, especially when it comes to dealing with the ultra high net worth (UHNW) segment.
Thompson adds:
"I don’t personally think that in the next five to ten years, we’re going to have robo-advisor services that are quite savvy enough to be able to take on the complexities of overseas investments, complicated trust and estate management and certain elements of tax management.
"I think for those types of services there will always be a need, at least for the foreseeable future, for human interaction. This is due to technology not being quite there yet and secondly, the warm comforting feeling that a very rich individual gets when they walk into a mahogany walled office and speaks to their private banker about their very particular matters."
Thompson sees robo-advise as a tool that wealth managers can use to engage the HNW segment as opposed a complete end to the traditional model.
Thompson believes that innovations in authentication will be significant in the industry. He says that Equiniti is looking into digital passporting as a mechanism for authenticating clients with a far shorter timeline as opposed to the current AML KYC checks:
"You can digitise an image of the passport which uses character recognition and send an image of that passport which can then be run against the UK passport office database for verification of that person’s identification and this, in terms of speed is around about a 30 minute round trip depending on the customer. In terms of actual latency, it’s a matter of minutes to actually send out a message and get a response back, provided they can find their passport."
Huw Thompson, business development director for wealth management services at Equiniti
