The WEALTHTECH Book

How to Digitalize Wealth Management at Banks

By Sascha Freimueller

Managing Partner and Founder, Dufour Capital AG

Ryan Held, PhD

Managing Partner and Founder, Dufour Capital AG

and Dr Roman Timm

Partner, Dufour Capital AG

Digital Financial Battlefield

The digitization activities of established banks who dominate the market in wealth management are quite different from those of new entrants like robo-advisors. While robo-advisors go digital in the channel (web and mobile) and the content (origin of advice), the digitization efforts of banks are mostly focused on customer interfaces (channels) and cost-saving back-office automation. However, wealth management decisions – such as asset allocation, investment selection and portfolio/risk management – are done the traditional way, based on expert human judgement. The use of algorithms for running these core business processes is not something banks appear eager to do yet. However, by sticking to traditional wealth management methods, banks will lose ground vis-à-vis more data and innovation-driven new market entrants or early adapting trend-setting banks. Digitization of wealth management is in full swing now, and will change the landscape of the financial industry fundamentally.

Traditional Wealth Management Frameworks Under Attack

Forecasting market developments, as required by traditional wealth management concepts, turns out to be a challenging task and often has not met expectations. Human emotions – such as greed and fear, ...