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Digital Transformation & Wealth Management

September 29, 2021

The wealth management industry deals with challenges such as changing business models, fintech disruption, increasing client expectations, and revenue and fee compression pressures. In addition, the pandemic has further accentuated a VUCA (volatile, uncertain, complex, and ambiguous) environment, and digitization has become extremely important. Traditionally, the wealth management business is based on personal relationships and trust, as client engagement involves multiple people and manual processes. For example, clients deal with an investment advisor assisted by middle and back-office staff – account opening, money transfers, and transactions are handled by different people and, therefore, subject to human error. Thus, while everything seems to run smoothly to the outside observer, in reality, it rarely does.

The current business model has low scalability and efficiency – according to McKinsey, the need of the hour is for a next-generation operating model that is supported by data, analytics, and technology. The pandemic was the catalyst for this inevitable change as it triggered a shift to digital sales and advisory services. Clients seem to have embraced this change as well and expect the changes to continue after the pandemic.

We are now at a point where the industry’s business models are undergoing disruption, and digitalization is accelerating this change. Here are a few factors that are driving change in the world of wealth management.

Data & Analytics

The wealth management industry seems to be behind the curve in terms of data and analytics adoption. However, the use of data and analytics in various business processes, such as advising clients, portfolio formation and management, risk assessment, etc., can significantly enhance the value of services provided by wealth management companies.

Data analytics benefits both advisors and clients – better analytics and visualization tools can add value to the vast amounts of data advisors work with. Using advanced data analytics tools and techniques, wealth management organizations can generate meaningful and actionable insights for their clients to make informed investment and business decisions.

Mastering the Cloud

Most wealth management companies face the complexity and inconvenience of outdated software systems. Cloud computing allows for system upgrades without completely changing the IT landscape in one fell swoop because it can be implemented modularly.

The pay-per-user feature is also transforming the way wealth management firms create and offer specialized applications and services.

Prospective companies have already begun planning their cloud transformation strategies because they are well aware of the challenges associated with their adoption while being convinced of the many positives they bring, including the ability to help asset managers use their resources more efficiently, plan management and budget allocation, and help organizations gain agility by creating a supportive IT infrastructure.


Robo-advisors are defined as digital platforms that provide automated, algorithm-based financial planning services with virtually no human control – they collect information from clients about their financial situation and future goals through an online survey and then use that data to provide advice and automatically invest client assets – so they are also called automated wealth managers.

They are an attractive option for younger investors who don’t have a lot of money to start investing, don’t necessarily need the personal interaction and human relationships that older generations do, and prefer not to spend a lot of money on wealth manager commissions.


Compliance with industry regulations is a high-risk area for wealth management firms, as any failure on their part can result in financial losses and cost them their reputation and punitive actions by governments. As a result, firms have begun using technology to perform functions such as due diligence, monitoring transactions, reporting to regulators, data management, etc., to reduce regulatory risks and costs.

RegTech, or regulatory technology, eases the compliance burden for asset management firms and uses artificial intelligence, machine learning-based data mining algorithms, offers services in the cloud, and integrates with organizations’ existing systems through APIs to make it easier for firms to adopt new technologies.

In conclusion, digital transformation in the wealth management industry is already well underway. However, successful adaptation and adoption require that the organization embrace it with an open mind. Implementing technology can be risky, but those firms that can adapt and embrace change will benefit in the long run.

Bragona Technologies is an expert in digital transformation, working with clients across multiple industries. We’ve armed many companies with the benefits of D&A, AI&ML, and cloud technologies to build a more forward-looking business. 

If you’re looking for a trusted IT partner, email sales@bragonatech.com

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