Technology in wealth management and its impact on UHNWIs

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Technology in wealth management and its impact on UHNWIs

Lee Wong - Head of Family Services for Asia

Lee Wong

Head of Family Services for Asia

A paradigm shift towards digitalisation of our society was already underway prior to the outbreak of COVID-19, and the global pandemic has further accelerated the pace of digital transformation in our economies. Amidst the crisis, technology has been a critical enabler for families to stay connected and for business continuity. It has proven to be a game-changer as people found increasingly innovative ways to embrace technology for work, leisure, education and fellowship with families and friends. 

More significantly, the pandemic has given the world an accelerated glimpse of how technology can revolutionalise the way businesses operate

More significantly, the pandemic has given the world an accelerated glimpse of how technology can revolutionalise the way businesses operate. For example, according to a McKinsey report , the average share of customer interactions that are digital leapt globally from 20% in May 2018 to 58% in July 2020; and from 19% to 53% in Asia-Pacific over the same period. This translates to an acceleration of digitalisation by three years and four years respectively. The transition to remote working amidst various lockdowns also enabled companies to re-examine the need for a centralised operating space, as well as the need for strong IT infrastructures. Against this backdrop, a shift towards technology and digitalisation is unavoidable in any company’s strategy.  

Although technology has been a “great enabler” in certain aspects, the legacy of digitalisation and innovation in the COVID-19 era could be the emergence of greater inequalities. With the increasing dependence on technology, the pandemic has exacerbated the digital divide between those with access to technology, and those without. Furthermore, with the integration of digitalisation in business operations, the lower-skilled routine jobs are further at risk of being displaced. According to an OECD report , low-skilled, older workers, and workers in jobs at high risk of automation will bear the brunt of the changes and benefit little from the jobs created in high-tech industries.

In an ultra-high net-worth (UHNW) survey we conducted in end 2020, the majority of UHNWIs surveyed believe that there will be an increase in inequality going forward, with most (83%) convinced that this will be a major characteristic of the new normal. However, conversations are taking place regarding the role private capital plays as a force for good.

Role of private capital as a force for good

Many of our survey respondents were hopeful that technology could emerge as a potential white knight in the long run, with healthcare, financial services and education all becoming more accessible to the poorer members of society.

Coupled with private capital, technology has a unique opportunity to contribute as a force for good in this fight

Coupled with private capital, technology has a unique opportunity to contribute as a force for good in this fight. Private capital has the ability to be deployed quickly and flexibly at significant levels, and can bring about a transformative impact if used appropriately. For example, some families are working with NGOs to provide access to technology, through avenues such as providing computers and laptops. Technology can help reverse the increase in inequality, by providing greater remote access to education and skills upgrading, which a survey respondent believes to be one of the best equalisers.

On a larger scale, technology also holds the promise of reducing imbalance in resources. In China, new platforms have emerged to narrow the opportunity gap between the rich and poor. The promotion of micro and small enterprises via e-commerce platforms, and availability of fintech to meet the financing needs of micro and small businesses have allowed small businesses in rural and remote areas to thrive, thereby equalising opportunities. 

 

Technology in banking

In terms of the role of technology in banking relationships, majority of our UHNW study respondents (81%) believe that “more digital less physical” interactions will become the new norm. Hence, technology is an important conduit through which a bank’s investment expertise is channelled. The marriage of technology with the human experience will be increasingly vital to banks’ nurturing of their relationships with clients. Banks with strong technology platforms will have a competitive advantage.

Here at Lombard Odier, technology is our key pillar and we take a digitally augmented, but a resolutely personal and human approach in building relationships

Here at Lombard Odier, technology is our key pillar and we take a digitally augmented, but a resolutely personal and human approach in building relationships. This is done through our single global technology platform – My LO – which provides our clients fully customisable portfolio analyses and reporting, secured communication with their bankers, and access to our research. 

Physical interaction remains important for UHNWIs nevertheless, as they convey emotional and human dimensions more accurately as compared to a video conference. Indeed, in the context of wealth management, UHNWIs prefer to interact with a physical person and receive information directly from their banker. Some have indicated their hesitance to start a banking relationship or make a major investment decision without a physical meeting. This is a challenge that our industry has to strive to overcome, especially if borders continue to remain closed.

Ultimately, while having cutting-edge technology facilitates service delivery and staying close to our clients, the authenticity of the client-bank relationship and the quality of advice and services are what make the difference in the end.

Important information

This document is issued by Bank Lombard Odier & Co Ltd or an entity of the Group (hereinafter “Lombard Odier”). It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a document. This document was not prepared by the Financial Research Department of Lombard Odier.

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