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In Banking, Wealth Lags Retail in Digital Capabilities

By Thomas Coyle April 19, 2017

Globally, wealth-related digital banking services lag personal banking digital wealth services, according to a new report by Avoka, a digital-sales platform provider.

The white paper, called “2017 State of Digital Sales in Banking,” says less than 25% of wealth banking products are primed for online sales versus 66% in the retail banking channel.

Over the past year, bank-housed wealth products saw a 41% increase in digital readiness as compared to a 39% increase in digital readiness for personal banking products.

But Avoka says the increase in digital readiness for wealth products starts from a lower base and owes a lot to “increases in mobile account opening and loan application readiness in Australia and Europe.”

In general, says Avoka’s chief marketing officer Don Bergal, wealth products “still have a long way to go” when it comes to making them more easily accessible online — especially in North America where, says Bergal, results “were unchanged from 2016 to 2017.”

Put another way, “Of the 10 North American large banks, only two had substantial wealth management digital offerings,” Bergal tells FA-IQ.

Avoka — which declines to mention specific companies — thinks banks can’t afford to be complacent about client-facing wealth management capabilities. This is especially true in light of competition for private client wallet share from fund companies and discount brokers.

“Since wealth products are important for high-value customers, and there is increased digital competition from non-bank wealth management options, beefing up the availability of wealth account openings would seem to be a priority,” Avoka says in its digital banking report.

Don Bergal

In particular, says Avoka, “depending on paper sign-up processes for wealth management is not a long-term growth strategy.”

In another alarming sign for digital progress at U.S.-bank-sponsored wealth management platforms, a lack of progress in mobile onboarding over the past year was matched by sluggishness in desktop-based online onboarding.

“Usually, creating desktop capabilities is the first step, followed later by mobile,” says Bergal.

It also seems North American banks take an all-or-nothing approach to digital services. “For example, if a bank had any capability, they had it for IRA, cash management, custodial – essentially all wealth products,” says Bergal. “And if they did not have digital onboarding, they did not have it for anything in the wealth space.”

Avoka sees a couple of reasons banks are a bit out of it on the digital front.

For one thing, they’re addicted to silos. “This means that for some banks with great progress on personal banking, they showed no progress on wealth,” says Bergal. “And for at least one of the banks doing well on wealth, their personal banking scores were dismal.”

For Bergal, this suggests “the two lines of business are still separate in the bank’s view of the market, despite the fact that their customers want to see a consistent financial relationship.”

Another reason banks are behind the digital curve is that wealth services are inherently more complicated than retail services. “There are more documents involved, more compliance – and much of it is outside the core competence of a bank's traditional IT.”