Wealthtech firms are conquering the wealth management industries in Switzerland and Liechtenstein. Together, they create a win-win-win situation, benefiting wealth managers and their clients.
Switzerland and Liechtenstein are world-renowned for their financial services industries. Since digital technologies have gained traction, both countries have placed themselves on the map as digital frontrunners. And as it makes sense to combine both of these strengths, the region is now home to a leading ecosystem of wealthtech businesses.
Younger customers have different needs
More than 300 wealthtech providers from 21 different countries are currently serving Swiss- and Liechtenstein-based wealth managers. 170 of those companies are homegrown Swiss or Liechtenstein companies, says a report by Wealth Mosaic.
Wealthtech is booming now that the younger and more tech-savvy millennials generation is making up the lion’s share of wealth management customers. They are more willing to use technological tools and also expect providers to offer such tools. Thus, digital wealth tools are not a nice-to-have anymore today, but a necessity for the future of any wealth management business.
According to the report, wealth managers will have to offer certain requirements to meet the needs of a younger customer group. Interestingly, most customers still request dedicated time with a human advisor despite the spiking demand for digital tools. Thus, digital tools are becoming a compulsory requirement, but they do not replace the human advisor and the advisor-client-relationship.
Especially important is also a structured approach to fees and self-service capabilities. Communication through social and digital channels and fully digitally-enabled account opening was also mentioned as top-requests by a younger customer group.
COVID has accelerated ongoing trends
While the trend for more tech in wealth management had been ongoing for a while, the changes brought about by the COVID-pandemic has pushed it to new heights. Besides challenges like fee compression, intense competition, and a low interest rate environment, the need for digitalization is now accelerated.
It brings massive opportunities. Physical locations are no longer imperative as clients are changing the way they interact with their wealth managers. It’s abundantly clear where the wealth management sector is headed: It will follow other industries and shift towards a more open ecosystem model.
Open banking makes that possible. It means banks and wealth managers share client data with third-party technology providers. Fintechs and financial services providers can offer their services together, resulting in a better client experience and a more competitive market positioning for all involved firms.
The same is already happening in mainstream-banking, where, for example, payment services are increasingly being offered by fintechs or partnerships between fintechs and banks. Wealth management is headed in the same direction, with wealthtech firms offering wealth management tools and platforms that meet the demands of younger generations.