Liz Field
CEO, Personal Investment Management and Financial Advice Association (PIMFA)
Wealth management and advice firms are now operating in an increasingly digitised environment and all firms recognise the need to enhance their proposition through the innovative use of technology.
The COVID-19 pandemic has accelerated digital trends that were already there, in part thanks to shifting demographics plus market and legislative changes. According to the Department for International Trade’s UK Fintech State of the Nation report 2019 (1) 56% of traditional financial institutions have already put digital innovation at the heart of their strategy. Plus 82% of established financial services firms1 expect to increase fintech partnerships in the next three to five years.
Fintech in the UK to double by 2030
Fortunately, the UK has one of the leading fintech industries in the world. The UK tech start-up and scale-up ecosystem is valued at GBP 463.6 billion (USD 585 billion) – 120% more than in 2017 – and more than double the next most valuable ecosystem, Germany, at GBP 217 billion (USD 291 billion). Current estimates suggest there are over 2,500 fintech firms based in the UK alone and the number is estimated to more than double by 2030.1
75% of wealth executives expect digital interaction will be the norm in two years and 89% of investors say their preferred communications channel will be through mobile apps.
We also know, thanks to an extensive and recently released report from Lexis Nexus, that digital innovation is being driven not just by the wealth management industry on its own but is something investors are demanding. Digital access has become a big priority for them according to 40% of investors. Meanwhile, 75% of wealth executives expect digital interaction will be the norm in two years and 89% of investors say their preferred communications channel will be through mobile apps.
Greater access for customers
However, how the digital transformation of the wealth management industry is facilitated is less clear. Consequently, PIMFA with the support of Morningstar, is to launch its own Wealth Tech platform in the first quarter of 2022.
There have been several false dawns for technology in financial services in the past – think the revolution in online banking expected 20 years ago that, in truth, has only really taken hold in recent years. But this time feels different. In part, it is the result of technological developments that have led to technology use becoming far more commonplace. Amongst other things, investors want greater access to markets, more flexibility, more contact with their wealth manager or adviser, and more convenient forms of communication. The wealth management and advice profession knows that this digital transformation is key to its continuing and future success in helping people to build their financial futures.
