The Australian wealth management industry should not only embrace digital technology but redesign its business model around the connected customer, according to a research paper.
‘The Digital Revolution of Wealth Management', which was written by the Financial Services Council Deloitte Future Leaders Award winner Bree McDonough from Suncorp Life, explored the digitisation of wealth management and the effects it has on the way companies connect with their customers.
McDonough said the wealth management industry should build digital intelligence that connects with customers' changing needs and expectations.
"The wealth management industry will see more disruption over the next decade," the paper said.
"If the industry does embrace the digital revolution it will experience a hyper-connected relationship and provide high speed access for customers through multiple channels."
McDonough believes the industry will be more contextually aware and will use data analytics to deliver personalised advice.
It will also be more collaborative, where customers will get real time communication and feedback on social platforms, while cloud computing will bring infrastructure costs down, connecting experts internally and externally.
"Today the industry needs to meet connected customer expectations at every interaction," the paper said.
"To deliver this, wealth management businesses need to embed a customer-centric business model with the agility to respond quickly to their changing needs.
"Businesses that don't adapt their business model to meet the changing needs of the connected customer will be left behind."
Research author Bree McDonough gives the example of Commonwealth Bank's connected customer strategy, which saw them go from having the lowest satisfaction out of the big four banks in 2007, to the highest in 2013.
The bank implemented customer-centric and technology strategies and launched initiatives that involved digital technology. It was the first Australian bank to go real time 24x7 and one of the first in the world.
"Australian wealth management businesses mostly have traditional top-down business models, which make it hard to respond quickly to connected customers," the paper said.
"The digital revolution demands a cross-functional, horizontal and most importantly collaborative model."
Australia has one of the highest rates of smartphone users in the world, but only 46 per cent of Australian businesses have mobile optimised sites.
Customers increasingly have a DIY attitude and show a trend of direct engagement. Legislation changes are disrupting the value chain by supporting direct and DIY demand.
For example, changes to MySuper have increased competition of simple online direct super products. Google search traffic for the keyword superannuation is up by 40 per cent from 2012.