Trusted Providers for Trusted Advisors
Wealth management is a crucial component to the banking sector. It requires seasoned experts to advise clients on how to both protect and grow their wealth. Innovative technology from the right provider can enhance this relationship.
If a courteous teller announced he or she was leaving for a competing bank, would you close out all your accounts and follow? What if your favorite bartender did likewise? Would you move your Happy Hour to a new pub?
Probably not.
What if your mechanic did likewise? Or your dog groomer, accountant or hair stylist?
Good chance you’d follow them.
Such is the trust factor. Some jobs demand it.
Earn trust, and you get loyalty as a result.
That’s what wealth management is all about—trust and loyalty. When wealth managers move from one bank to another, many times clients will pull their money out and follow them. They’ve earned trust during the good times and the bad, and that takes, among many things, three traits: expertise, experience and courage.
A good wealth manager must be smart enough to anticipate what’s going to happen in the market, and that comes from experience managing wealth when the market rallies, plunges or gyrates. It’s no job for the timid, but fortunately today, technology is providing managers with the tools to give them an edge, whether they’re working for the mass affluent (worth $100,000-$500,000) or the Ultra High Net Worth Individuals ($30 million or more).
Tools to better manage wealth are usually found in new banking cores, and today, a modern core is a must. No two customers are the same, and since their needs can differ vastly, a core must be flexible and agile enough to handle the differences.
For example, one manager at a bank may cater to a larger number of mass affluent clients and therefore must manage substantial amounts of transactions and payment volumes on the core. A colleague may cater to fewer but much wealthier clients and must work on a core with access to capabilities and functions allowing for the smooth and seamless execution of complex transactions. These might, for example, involve multiple asset classes, currencies, brokerages, regulators and so on.
Outdated banking cores often fail to handle such demands, especially in times when markets swing wildly. That’s why, when considering strategies to modernize its core, a financial institution must view wealth management as an umbrella covering three businesses: private banking, investment services and brokerage services. Modern cores must enable the institution to do all it needs in these areas, and to do so seamlessly.
Private banking is what most associate with the sector. This space offers personalized financial and banking services for individuals and families, while investment services focus on managing those investments, as well as activities such as tax planning and related advice. The brokerage arm facilitates the buying and selling of securities for clients.
A good technology provider should also offer the bank solutions that maintain that human-to-human business model while also facilitating digital services. New IT systems must be able to handle swings in credit volumes seamlessly, as well as enabling more Straight-through-Processing (STP). This means that fewer people manage certain processes from initiation to settlement in areas like securities trading, payments and foreign-exchange transactions. It’s all about a seamless flow of data that makes wealth management more efficient.
Core modernization should also occur at a pace with which everyone is comfortable, and the provider must be able to make all services available and easy to use during the journey.
If not, what is the point of investing significant sums to modernize?
A trustworthy provider must also oversee the front end and the back end seamlessly. It should offer solutions to manage external channels (i.e., client portals) and internal channels, such as the expert workstation or relationship management, AI, portfolio management, Management Information Systems (MIS)/analytics, payments, security, anti-money laundering, a general ledger, etc.
If the provider does not offer services related to a myriad of activities ranging from taxes to risk monitoring to reconciliation, it should collaborate with partners who can help to deliver everything the customer needs.
An effective core must be composed in a way that is right for a particular strategy, meaning the institution acquires what it needs and how it needs it. That convenience is generally found on the cloud these days. Evidence shows that a cloud-based core enhances essential technical aspects for modern banking, such as security, reliability, scalability, and agility. This progress is driven by substantial investments from providers like Temenos and key partners, including hyperscalers like Microsoft and AWS. The cloud also offers a flexible cost structure (OPEX) that may better align with business models compared to traditional on-premises resources. Thus, a financial institutional enjoys greater financial and technical wherewithal to facilitate modern order management systems, portfolio rebalancing systems, regulatory compliance and other key areas of the business and can do so on its own or with partners.
While on-premises core offerings may seem reliable and comfortable, exciting new technologies like AI, composable banking, data analytics and real-time payments have redefined banking as we know it. Moreover, it’s important to point out that banks will get the most out of these new technologies when operating on modern core technology.
Banking is no longer something people do, it’s now a service that’s all around them, and wealth management is part of this trend as well.
Some banks may opt for an entire wealth management core suite, though others may be happy with their current core system but wish to attach other structures such as security features and certain treasury operations including the management of swaps, repos and foreign-exchange operations.
Such is the appeal of a provider that offers end-to-end services, and a good provider should make that happen.
Temenos does.
Our front-end and back-end solutions provide extensive sets of banking capabilities and functionalities across retail, corporate, treasury, wealth and payments areas of banking that allow for the launch and delivery of products and services that translate into new and exciting user experiences. Cloud-native, cloud-agnostic technology and architecture allow for superior scalability and at lower costs, be it facilitated via SaaS, on public or hybrid cloud, or on premises.
Wealth management is a key area of focus in the Latin American banking sector, and it’s poised to grow.
The Latin America Wealth Management Market, measured by assets under management, is expected to grow from USD 1.18 trillion in 2024 to USD 1.32 trillion by 2029, an enormous figure that will pass down to more tech-savvy generations over time.
A good banker knows the client, their strengths, weaknesses—even family secrets.
His or her job is to advise those clients on how to protect and grow their portfolios. That takes expertise, experience and courage.
The technology is out there to help, not replace.
Trust. It can only be earned in time—it doesn’t come overnight.
A winning wealth manager earns clients’ trust.
They use technology to keep it.