Anthony DeChellis is CEO of Boston Private, a leading provider of wealth management, trust, and commercial and private banking services.
Basic financial services are becoming increasingly commoditized. Growing numbers of DIY platforms empower consumers to transfer money, pay bills, borrow, trade securities and invest, all via the convenience of a mobile app or online platform. The initial obstacles to new tech-driven models — inertia, consumer confidence, technological acuity, platform agility and regulatory preparedness — are steadily fading. From what I’ve seen, most financial services firms understand that it is now a matter of “when,” not “if,” a new model will disrupt Wall Street and banking in general — not unlike the industry-altering disruption driven by companies such as Apple, Amazon and Netflix.
What will this disruption look like? In what form will it arrive? Some may be on the lookout for a blockbuster new product or app, but those are unlikely to create a seismic shift. If we look to the examples of the aforementioned companies, the difference maker will be a truly reimagined client experience. Apple, Amazon and Netflix didn’t create disruption with new inventions per se — they created a revolutionary client experience that reimagined and reassembled capabilities that were already there for anyone to use and redesign. They reimagined what a mobile phone, bookstore or media library could offer its end user. I don’t believe they started by asking: How can we sell more of “x” product? Rather, they likely asked: How can we create new sources of value and delight our clients via an entirely new design of products, processes and platforms?
If technology investments start with the goals of increased product sales, they’re unlikely to transform the client experience. Incumbent financial services firms are spending billions of dollars on new technology, which has undoubtedly improved the ease of accessing and performing financial service functions. But in reality, these digital transformations just replicate the brick-and-mortar experience online. Winning firms looking to invest in their technology should, instead, begin by asking: How can we deliver new sources of value never before imagined from a financial services company? And how can we make it more convenient than ever to access that value? Apple, Amazon and Netflix didn’t just translate an analog service to the web. They created expertly tailored and customizable platforms that enable users to extract the most functionality and value in the least amount of time.
A financial firm that manages to pull away from the pack will be the one that can deliver new sources of value while simultaneously delivering legacy services with unprecedented ease and simplicity. Firms should endeavor to be the most effective and efficient user of a client’s time. The mission should be to empower clients to accomplish what is most important. Money has the potential to be a growing resource, but time, on the other hand, will forever be limited. A trusted advisor then should focus on maximizing the “value created/time invested” ratio for clients, understanding that their mandate is not simply to manage wealth in the smartest way possible, but to optimize the time the client invests to achieve their most important objectives. All of this can be accomplished through a reimagined, technology-enabled client experience.
Large incumbents, as well as boutique firms, in the wealth management business will often respond to the suggested threat of disruptive platforms by emphasizing that high-touch service and personalized advice cannot easily be replaced by “robo-technology.” However, the two are not mutually exclusive. Though it is difficult to replace human judgement and wisdom, the traditional “advice” models can be made more effective and more efficient with the implementation of empowering technologies. The approach should be to combine the best of both models so that technology enables better decisions and outcomes.
As the old saying goes, “the only constant is change.” Change is not new to financial services, but given evolving consumer trends and adoption of new technologies, we are at the precipice of dramatic changes. The lesson we can learn from other industries disrupted by new technology-driven customer platforms is that we must be relentless in rethinking and reimagining our opportunities to increase our value to clients. A client has an increasing number of choices to access financial services, but having a primary, trusted platform to solve their needs in a holistic manner is a more efficient use of their time. Building a dynamic and empowering platform that is centered on achieving desired client outcomes will produce a distinctive client experience to match emerging consumer expectations, which have not yet been met by the financial services industry.