Almost half of wealth managers will fail if they don’t digitally innovate, says new research

New research from Nucoro, a B2B fintech providing Wealth Management as a Service solutions, reveals wealth managers estimate that only 55 per cent of companies in the sector will still be around in 10 years’ time – if they fail or choose not to innovate digitally.

Nucoro’s findings reveal wealth managers also estimate only around 20 per cent of their client-facing interaction is currently done digitally. However, on average they expect to increase their investment in digitalising their businesses by 27 per cent between now and 2022. In total, 43 per cent intend to spend more in this area over the next three years. 
 
When looking at which areas of their operations wealth managers feel digitalisation can add the greatest value, 29 per cent cite administration, followed by 24 per cent who say client communication. One in five (22 per cent) cite investment and portfolio management.
 
In terms of how wealth managers plan to improve their digital propositions, 57 per cent are partnering – or are planning to partner – with specialist technology firms, while 22 per cent intend to build in-house solutions.  However, 11 per cent say they will sell their business to a company that is strong in this area, and 9 per cent plan to merge with another wealth manager that has an attractive digital proposition.  Some 7 per cent intend to acquire a wealth manager with a strong digital offering. 
 
Nikolai Hack, COO and UK MD of Nucoro, says: “Digitisation is key to success in wealth management and our research shows organisations in the sector acknowledge this and are investing heavily in this area.  However, the race to digitise will transform how the sector looks, with many companies falling by the wayside. There will be new entrants and a high degree of M&A activity.  There is little doubt that the wealth management industry will look very different in 10 years’ time.”