Decoding fintech: How to improve your wealth management practice

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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