PERSHING EMEA

2020 has been a whirlwind year. It is where the boundary between personal and professional has blurred. However, amid the chaos it has also encouraged us to slow down at points – giving us a chance to observe and reflect on how we can make both the world, and the business in which we operate, a better place. These moments of reflection are particularly pertinent to the UK wealth management industry as we head into 2021, with the industry facing important decisions as it seeks to keep up with the demands of investors today.

Technology and digital adoption is the dominating theme of this year for the industry, and serves as a key area of reflection for businesses looking to be successful in future. Moreover, it is this issue which will determine whether firms will just survive, or thrive. Levels of integration and adoption of digital capabilities will underpin all wealth management business’ ability to stay relevant with clients who are increasingly digital-savvy. But there is a big polarisation in how companies are tackling the technology challenge. Providing a user-friendly investor portal will be of most benefit if it is integrated with the back office software that enables efficiency for the business. Some consider investment in technology as expensive, too complex or simply not necessary, while others are putting it at the heart of their growth ambitions.

Since the initial lockdown in March, we have seen the industry react in different ways. Typically, the technology approach among UK wealth management businesses can be divided into four categories:

• The Tactical Adopters: focused on implementing the bare minimum digital capabilities to keep the business going over the short term, dealing with issues as they arise, and without any commitment of long-term technology investment
• The Fast Adopters: reacted quickly when lockdown was enforced earlier in the year – such as by buying laptops, setting up corporate Zoom accounts – but have no long-term plan for digital integration below the surface
• The Strategic Adopters: reacted well to initial lockdown measures, continuing to make digital improvements. The pandemic has been a catalyst for change, reconfirming a belief in the long-term importance of technology to the business
• The True Adopters: have long recognised the importance of technology and have a long-term business model plan that not only includes digital enablement, which includes providing clients with access to documents and valuations digitally, encouraging e-signatures, working video communication into the business structure, and using a secure channels such as portals to help achieve this, but also invest in systems that enable single data entry, straight through processing and the integrated tools that make life easier for their staff as well as clients.

The result of these actions and responses are critical to each business’ ability to stay relevant and operate as efficiently as possible in future. Fast adopters and tactical firms now could be on the back foot, as the cost of reactionary adoption fails to deliver longer term benefits. True adopters and strategic adopters are in the market for the long haul and are willing to invest in the business. They will reap the rewards of technology transformation now and over the long term.

The industry has been talking about digital adoption and other technological advances for some time, but prior to 2020 there was a lack of a dominant catalyst for change, meaning evolution and adoption was steady and measured until lockdown began in March.

There has never been a more powerful catalyst for this type of change than Covid-19. As we take time to reflect on this year, will the industry grab hold of this as an opportunity to continue that journey, or will we find a slowing of adoption?