Following the lockdown measures and the global effects of Covid-19, New Zealand is facing its deepest recession in decades.
This trend is echoed globally, as the World Bank forecasts that the world economy will shrink by approximately 5.2% this year. However, as seen in the past, a downturn in economic activity usually leads to a flurry of new innovations to help combat the effects of a recession. We’re already seeing numerous startups challenging the dominant video conferencing BigTech players, such as Google and Zoom, as the demand for this type of functionality grew from novelty to necessity practically overnight.
By Rachel Strevens, CEO and Founder of Invsta
The Covid-induced market sell off, quick resurgence, and low interest rate environment is causing uncertainty for many investors as they seek both security and returns. This uncertainty and conflicting priorities places a big emphasis on the need for accessible advice and transparency of information in helping consumers to make the right investment decisions. There is a huge opportunity for providers to capitalise on this uncertainty by supporting and reassuring investors throughout this period by improving the access to advice for investors across the wealth spectrum.
ASB recently indicated that up to 85% of their customers prefer online and mobile services, hence the decision to close certain branches and reduce operating hours. Physical interaction will play second fiddle to digital engagement as online becomes the norm. With the progressive requirements for digital interfaces and platforms in financial services increasing, wealth providers must prioritise to meet the needs of their consumers in an online capacity or risk becoming irrelevant.
Complex legacy systems, cumbersome regulatory requirements and lack of internal skills are some of the key roadblocks for wealth providers when looking to upgrade their systems. The recent surge in demand for digitalisation has accelerated the threat of BigTechs moving into the financial services space. With the enormous power and social influence that these BigTech firms hold, providers must look to partner with fintech providers for technological solutions to retain clients and avoid losing market share.
Leveraging technology to support the four key drivers of growth
There is no doubt that Covid-19 was a resounding wake-up call for providers. It presented two very distinct options; adapt or face outperformance from the competition. The findings from our latest report reveal how companies can leverage technology to support growth in a more sustainable, cost-effective and customer-centric way.
Increasingly, investors are wanting more control and insight into their investments. Placing some of the key investment processes into the hands of customers will not only help reduce administration overheads, but will also provide a more engaging user experience. With advancements in artificial intelligence, optical character recognition and biometrics, digital onboarding provides a streamlined platform that opens up new channels to market while reducing the cost of acquisition. Online investment functionality also has the potential to increase sales, as clients can make direct investments in a matter of minutes.
- Improved sales:
Actionable information derived from context-rich customer data is set to be the biggest enabler of the sales function. Having a deeper understanding of what drives the client’s investment decisions will help companies meet their customer’s needs throughout their investment journey. Data-powered robo-advice, combined with online investment, is a powerful tool to capture and convert the mass affluent group in a more profitable way. Democratising the investment process has the potential to not only attract new market segments, but also increase the spend per client.
- Improved efficiencies:
Navigating a recession requires companies to look at innovative, digitally-driven ways to trim overheads and drive a leaner, more financially-agile business. Traditionally, the compliance function has always been particularly resource-heavy, which has a direct effect on profit margins. Globally, there is a push for compliance teams to turn to regulation technology to help drive a leaner department and carry most of the administration weight. Automating KYC and AML processes into the digital onboarding experience will enable employees to focus on identifying risks and ensuring better customer outcomes.
- Better engagement:
As speed and cost efficiencies become table stakes, the new basis for competition will be on engagement and personalisation. Automated workflows driven by powerful data analytics will help companies to provide the right information, at the right time so that it is relevant to the investors journey. An integrated customer portal is crucial to provide regular, interactive, and tailored client communication to improve customer retention and protect the bottom line. Visual tools, such as financial calculators and forecasting models, provide an interactive way to communicate fund updates and market information.
Flanked by fluctuating market performance and shifting customer dynamics, the recession is here to stay. It presents an incredible opportunity for firms to reinvent themselves and address the financial needs of a much wider audience, opening up new opportunities to grow FUM and market share like never before. Companies that are actively embracing fintech partnership and digital strategies are in a better position to support the key drivers of growth and weather the recession storm.
Get the latest report from Invsta to discover the top emerging technology trends for financial service providers: https://www.invsta.com/2020-report-download
Disclaimer: Rachel Strevens is the CEO and Founder of Invsta. This article is intended to provide information and does not purport to give business advice.
Invsta is a B2B fintech company that provides a range of white label modules and interface solutions for wealth advisers, fund managers and KiwiSaver providers. Invsta’s digital solutions are focused around 2 core areas: providing an interactive and engaging online client experience, and improving back office efficiencies. Through their solutions, they’re helping companies to reduce costs, improving access to financial products and advice, and delighting investors with ease of use and digital engagement.