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Smart transformation in wealth management is not a zero-sum game
Wealth managers must acquire new capabilities to win in the “Smart Era” by collaborating with fintechs on broader use cases and application, by reinventing customer value propositions, and by reshaping the entire customer experience

April 01, 2020 | Chris Georgiou
  • Smart technology would bring real value to WMs leading to huge growth for the entire WM market
  • China’s wealth management sector acquiring capabilities WMs need to win
  • Lufax customer profiling system enables real-time identification of customer intentions a possibility

In the new era of smart transformation, financial technology (fintech) companies are evolving from market disrupters to enablers and partners of traditional wealth mangers, helping to realise the growth potential of the entire wealth management (WM) market, according to a new report commissioned by Lufax, an internet-based wealth management and consumer finance platform.

The report, titled “Global Digital Wealth Management Report 2019-2020” and authored by Boston Consulting Group (BCG), recommends that incumbent asset management companies, which mainly rely on offline business, can cooperate with fintech companies to revitalise old brands to meet clients’ demand for smarter services. The ongoing Covid-19 pandemic will accelerate momentum for wealth firms to enhance digital touchpoints as foot traffic plummets.

Smart transformation to propel digital wealth management into the new era

The affluent market, as defined by households with investable financial assets under $1 million, represents a fresh and scalable source of growth for WM over the coming decade, with a customer base representing 27% of all revenue while only accounting for 17% of the total assets under management (AUM).

Most people in this segment have half of their assets stored in cash or savings accounts. With the contribution of the rising customer subsegment, the report forecasts a 25-50% increase in AUM, a 15-30% growth in revenue, and a 25-50% expansion in profit margin over the coming decade.

Smart transformation will more conveniently and accurately find the right products for the right customers, enabling a s...

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