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Decoding fintech: How to improve your wealth management practice

This year forced us to use existing technology in new ways. An entire subculture has grown around video calls – which have been around for years – as they are now essential in our lives.

Whether for business calls, webinars, virtual happy hours, or talking to family, the pandemic made us realize the value of staying virtually connected.

Industries like financial services are also rethinking their use of technology to connect with clients, moving it from a side project to the main thrust in their efforts to enhance client experiences across the board.

Whether connecting with clients at their convenience or completing long processes in seconds instead of days, wealth managers, banks, and financial advisors are increasingly relying on digital tools to help. In financial services, this kind of technology is fintech.

What is fintech?

Financial technology (fintech) is largely the software developed by firms seeking to improve and automate financial services delivery and use. Essentially, it's the digital applications and programs built to oversee and run your financial life.

Within fintech, various companies provide or connect financial services through software or other technologies — using the Internet, mobile devices, software technology, or other cloud-based services.

While financial advisors must embrace fintech, many find it challenging to navigate various financial technology trends and offerings.

Trends of the fintech industry

Fintech is considered one of the fastest-growing industries. According to one industry report, the global financial technology market is expected to grow to reach a $305 million market value by 2025, increasing at a rate of 22%. The key reason for the growth includes high investment in technology-based solutions by banks and firms.

Now is the time to take advantage of this growing industry and its trends. Fintech opens the door for advisors to deliver services traditionally only available for the ultra-wealthy to everyone.

Recently, I participated in a live panel discussion with other fintech industry leaders. We discussed the crucial trends and themes taking place within fintech, here's what we came up with:

  • Rebundling of financial services — through technology, financial service providers can expand their offerings

  • New online digital banks — neo-banks and challenger banks are changing how customers engage with banks; everything is online and easily accessible

  • Banking as a service (BaaS) platforms — these platforms are expanding services the online digital banks offer

  • ESG investing — Investing practice used by socially conscious investors where they screen investments by environmental, social and governance (ESG) criteria

  • Blockchain — the ability to create secure, real-time communication networks with partners around the globe, creating transactional transparency

  • Artificial Intelligence (AI) — with the growth of AI, personalization will expand, client's investment portfolios can become customizable

  • Cybersecurity — with the expansion of the virtual environment, the need for cybersecurity will grow as well

  • Connectivity — the Internet of Things (IoT) will continue to grow along with the need for devices to connect to one another

  • Marketing-based wealth management businesses — as existing client base and target audience relies more on digital media to communicate, wealth management firms are placing a renewed emphasis on developing viable digital marketing strategies

Prioritizing fintech needs

With all these trends and changes taking place within the industry, advisors can be overwhelmed by the process of determining which fintech fits best and how to prioritize their needs.

First, identify the problem. What are your needs? What issues are you trying to solve? Once answered, these questions will determine which providers in the space can help. Evaluate your situation. Are you looking for an all-in-one solution? Or different providers? What is your team's bandwidth to learn new technology? Identify your current resources, the technologies you already have in place. Make sure future fintech integrates well with your current capabilities.

I cannot stress enough, take advantage of a detailed demo, or even a trial run of the product. Use the technology; make sure it is the right fit before you commit. Most importantly, find a fintech partner who will help you implement and always support the technology. As a leader of your firm, make sure you champion the fintech you select — show the team you are committed to your decision.

Leveraging fintech

Financial advisors can leverage technology to help implement and adopt client segmentation strategies. Client segmentation is essential to improve efficiency and profitability while growing your firm. Technology can help automatically segment clients into different tiers, appropriately matching the depth and level of services to the client's value to the firm.

Technology can also help improve client engagement. To make all client processes smooth and understandable — from account opening to trading to general communications — make sure you take advantage of technology. Offer a great digital experience by using technology as part of your daily advisor workflows.

Fintech is changing the world

Fintech is changing the way we use data. Through different data sets of machine learning and natural language processing machines are trained to predict sentiments and connect the fabric of data. This notion can help us connect better with our clients.

A power for good, fintech increases the availability of the wealth management industry. The industry will continue to grow. With more options, features, and life-changing technologies, fintech could help you deliver a better financial life for your clients.

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This blog is sponsored by AdvisorEngine Inc. The information, data and opinions in this commentary are as of the publication date, unless otherwise noted, and subject to change. This material is provided for informational purposes only and should not be considered a recommendation to use AdvisorEngine or deemed to be a specific offer to sell or provide, or a specific invitation to apply for, any financial product, instrument or service that may be mentioned. Information does not constitute a recommendation of any investment strategy, is not intended as investment advice and does not take into account all the circumstances of each investor. Opinions and forecasts discussed are those of the author, do not necessarily reflect the views of AdvisorEngine and are subject to change without notice. AdvisorEngine makes no representations as to the accuracy, completeness and validity of any statements made and will not be liable for any errors, omissions or representations. As a technology company, AdvisorEngine provides access to award-winning tools and will be compensated for providing such access. AdvisorEngine does not provide broker-dealer, custodian, investment advice or related investment services.

Carly de Diego

Carly de Diego

Carly works with financial advisory firms to drive growth and execute at scale. As the first employee hired at AdvisorEngine, she possesses in-depth knowledge of all our products and services. Carly has over 15 years of experience in the financial services industry leading training, product development and client success teams. Prior to joining AdvisorEngine, Carly worked as a business analyst at TD Ameritrade and was part of the Managed Account Advisors team at Bank of America Merrill Lynch where she garnered years of valuable experience working with custodians, managed accounts, clearing, and middle and back office functions. Carly holds a degree in Business Administration from Truman State University in Kirksville, Missouri.


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