Trends in Global Wealth Management: A Business Perspective

| Punto de vista

Key emerging business-focused technology trends in the wealth management industry

The financial markets worldwide bounced back in 2009 from the recessionary lows seen during the financial crisis years. While most of the banks that survived the crisis benefitted from this improved performance, their business priorities underwent significant changes, with most of them altering business models to incorporate lessons learned from past mistakes. During and after the worst of the crisis, there was increased emphasis on the wealth management business by both universal banks and boutique firms. Revenue and profit margins of the wealth management industry remained relatively stable during and following the worst of the crisis. This better performance as compared to other banking divisions led to an increased emphasis on the wealth management business by banks and other financial services institutions, with executives attracted to strong cash generation and low leverage. The wealth management business at universal banks is now emerging as a core competency that can help maximize enterprise value. This was aided by the global growth in wealth and population of high net worth individuals (HNWIs). Many of the larger banks are reorganizing their business divisions and top management teams to rightly position themselves to capitalize on this growth.

This paper explores the challenges faced by the wealth management industry such as constantly-evolving regulatory requirements. The industry is grappling with multiple regulations, some of which will alter the way products are distributed by wealth managers. Other regulations, such as the upcoming Basel III norms, will affect capital adequacy requirements for the parents of many wealth management firms, leading to trickle-down impacts. As the industry struggles to cope with the dynamic business environment while meeting client demands, wealth management firms are leveraging advancements in IT to grow their business and improve their operational efficiency. Firms are using the Software-as-a-Service (SaaS) model to create cost-effective and adaptable solutions that better meet advisor and client expectations.