Celent’s Innovation and Insight Day: Wealth and Asset Management Stream

We are only weeks away from Celent's 2017 Innovation and Insight Day where we will explore how players in the financial services market are leveraging technology in innovative ways in order to differentiate themselves in an increasingly competitive and challenging marketplace. We will be featuring a number of case studies, discussions, and deep-dives into topic areas surrounding innovation and focusing on themes, such as:

  • Customer Experience
  • Products
  • Emerging Innovation
  • Operation and Risk
  • Legacy Transformation

This is the first year we will have a Wealth and Asset Management (WAM) breakout session where we will cover a range of topics around innovative solutions and trends in WAM.  The agenda can be found here: Wealth and Asset Management (WAM) Program and will be presented by analysts from the Celent Securities & Investments and Wealth & Asset Management teams:

  • David Easthope, Senior Vice President, Securities & Investments
  • Brad Bailey, Research Director, Securities & Investments
  • Kelley Byrnes, Analyst, Wealth & Asset Management
  • John Dwyer, Senior Analyst, Securities & Investments
  • Ashley Globerman, Analyst, Wealth & Asset Management
  • Arin Ray, Analyst, Securities & Investments
  • William Trout, Senior Analyst, Wealth Management
  • James Wolstenholme, Senior Analyst, Wealth & Asset Management

I particularly look forward to sharing research around the evolving wealth management landscape as the core client base shifts from baby boomers to millennials. While much ground has been covered from the perspective of wealth managers to meet the digital needs of nextgen clients, wealth managers continue to be behind the curve in their digital offerings.

How are wealth managers and vendors responding to the paradigm shift in the development and execution of services and products to meet millennials’ distinct expectations?

This is just one example of the many topics that we will discuss at I&I day – we hope to see you there!

 

Wealth and Asset Management Converges on Celent’s Annual Innovation and Insight Day

This will be the first year that Wealth and Asset Management (WAM) will have its own stream at Celent’s annual Innovation and Insight (I&I) Day. Traditionally, I&I Day has been focused on insurance and banking, and is an opportunity for insurers and banks to demonstrate innovative projects with the chance to be recognized for outstanding capabilities. Typically, each insurer or bank begins preparing months in advance by submitting their case for how they have exceled in a particular sector. For example, in banking, awards are given for innovation in payments, lending, open banking, and product innovation.

As this is the Wealth and Asset Management debut, the organization of the day will be slightly different but no less exciting. WAM attendees will have the chance to hear topical discussions and engage in healthy debate around ideas that are driving innovation in the wealth and asset management sectors. Attendees of the WAM stream will also be able to interact with insurers and banking at designated times throughout the day, creating a truly collaborative and dynamic environment.

A preview of the WAM day:

Senior Vice President David Easthope will discuss Top Wealth and Asset Management IT and Business Trends. Ashley Globerman will share how wealth management firms have modernized legacy platforms to keep up with robo advisors and to serve the millennial generation.  Will Trout will explore the degree to which artificial intelligence (AI) represents a logical next step in the development of automated advice, helping to scale asset management functions and the thinking and reach of the human advisor. I will be joined by Arin Ray to discuss how wealth managers are using natural language processing and natural language generation technology to enhance their value and improve customer satisfaction. Arin will also share how AI tools are improving efficiencies in operational risk and compliance functions, such as KYC and AML. 

Jay Wolstenholme and Will Trout will explore the intersection of Wealth Management and Asset Management. They will cover a lot of ground, sharing anecdotes of how wealth managers are adopting trading platforms and advanced technology once common to only asset managers.  Later, Jay will explore the opportunities of $100 trillion in global assets. How can asset managers and asset owners prosper in this environment using automation and analytics? Brad Bailey will follow Jay’s discussion with an equally compelling conversation on how asset management trading desks are loading up with analytics and technology to execute across an increasingly complex cross-asset market structure. The WAM Stream will end with a lively interactive panel discussion of the edge disruptors in WAM(AI, robotics, big data, analytics … you name it!).

 

The Virtual Agent: NLP in Wealth Management

NLP has many use cases in consumer banking and is gaining adoption in wealth management. In my report, The Virtual Agent: Natural Language Processing in Wealth Management, I look at some of the more popular use cases for NLP, including for chatbots/virtual assistants and biometric identification, as well as the more cutting-edge applications, like for advisor matching and more complex virtual assistant processes.

IPSoft and Personetics are two vendors making huge strides in the field of NLP.  IPSoft is working with SEB and Personetics is working with BRD, a subsidiary of Groupe Société Générale, to explore innovative use cases for NLP.

Enterprises looking to explore NLP should consider whether a solution has a process ontology that builds best practices, works across multiple languages, detects formality, and perceives when a human should get involved.  Best practices should be tested on internal use cases before applying NLP technology to external-facing problems.

In the next 12 months, it is likely we will see many of the largest consumer banks that already have a virtual assistant rolling out new uses cases for their virtual assistants within both their consumer banking and wealth management arms. Other banks that do not yet have a virtual assistant or chatbot offering will be racing to catch up.

FinTechStage Luxembourg

This week I attended the conference, FinTechStage Luxembourg, which brings together FinTech start-ups, investors, financial institutions, technology partners, and regulators to discuss the evolving financial market ecosystem. Some of the key takeaways from the day-long discussion among industry experts included:

  • Luxembourg is aiming to attract UK FinTechs post-Brexit by becoming a hub to access the EU
  • Artificial intelligence
  • Digital identities
  • Banking the underbanked in developed countries
  • RegTech
  • Data protection

For the purpose of this blog post, I will focus on the RegTech component of the conference as that subject stood out to me as one of the more thought-provoking topics as the financial services industry transitions into a technology industry and the effect this has on the entire value chain across all industry players. Lázaro Campos, co-founder of FinTechStage, introduced RegTech (and RiskTech) as "recent risk-centric regulations require firms to be more coordinated and streamlined in terms of information production and delivery for trading, risk, compliance, and financial reporting".  One of the major points within this theme was that the application of new technologies will aid in making processes more efficient, and importantly, democratise opportunities by opening the market to previously unprofitable and underbanked client segments. 

While "incumbents and technology vendors have invested in regulatory solutions for years, the theme of RegTech is an interesting investment theme that has emerged over the past year and has since become mainstream" (Matteo Rizzi, co-founder of FinTechStage). It was made clear that regulators are as encumbered with the increase in regulations as are financial market players. 

Nadia Manzari, Head of Innovation, Payments, Markets Infrastructure and Governance for the Commission de Surveillance du Secteur Financier, commented that regulators need to be innovative in order to foster a healthy FinTech ecosystem. The subject of FinTech sandboxes was at the heart of much of the discussion – does each regulator need to offer such an environment? Regulators from the UK, Singapore, Hong Kong, Malaysia, Indonesia, Australia, and Thailand have been coming forth with plans to establish FinTech sandboxes, which enable financial institutions and start-ups to experiment with financial technology solutions that may not yet comply with new regulations. The benefits of sandboxes (versus piloting, for example) emerged as a debatable topic, but it is evident that regulators' evolving perspective on FinTech is indicative of a larger theme that is occurring in the regulatory space: the centralised banking system with which we are familiar will change in the near future.

Cloud is Down

Yes, even the cloud can go down!

For the many firms, including the SEC and CIA, who run their infrastructure in the AWS cloud, Tuesday’s outage was a pain. The economic impact of the outage will easily be in the many tens of millions.

It is particularly poignant as it comes at a time when so many core processes are moving into the public cloud and more and more capital market participants are building in the cloud, or toward a cloud future, as we discussed in The Cloud Comes of Age in the Capital Markets: All Clear for More Cloud.

This outage is a reminder that not only can all technology fail at some point, but it will. The scale of this week’s outage, along with its rarity makes it newsworthy. However, the scale masks the simple truth that the net downtime of this failure is far less than the aggregate downtime, had all impacted firms been running their own infrastructure.

Furthermore, it is a lesson for firms moving into the cloud to consider how to best manage risk profiles across various clouds and models, or ensuring that they are running across regions (a single AWS region went down).

But the news flow now suggests the most common point of failure: the human. And, of course, the proverbial fat finger. As in many cases, in market technology failures, it is at the human/machine interface that is the weakest link.

This is a time to learn, access the risk and move forward.

Ellevest Knows Their Customer

At the end of last year, I decided to try Ellevest, an automated advisory platform that specializes in serving women’s distinct needs.

Ellevest’s email communication and marketing have stood out to me. Ellevest understands their audience.  The emails sent by Sallie Krawcheck, cofounder and chief executive, resonate with my beliefs. Her communication strikes the right balance of sensitivity to women’s issues, responsiveness to current events, and emphasis on the importance of financial goals/investing, while also coming across in the same organic language one would use with their best friends. Emails from other Ellevest team members are equally relatable and informative.

I even received beautiful flowers in the mail around the New Year from Ellevest. The flowers were delivered by Bouqs, a company that delivers farm to table flowers and is a provider that I personally use frequently, so this gesture was on point. 

The passive investment platform is much like the others. However, the infographics are nice and the user interface is more attractive than competitors.

While I wouldn’t be surprised if Ellevest expands beyond its focus on women (though I have not heard anything to support this), I am confident Ellevest understands its consumer base and will continue to reach out and serve women uniquely.

Impact Investing Gains Momentum

The polarizing political climate appears to be serving as an impetus for some firms to take socially responsible investing more seriously.  At today’s Impact Investing conference hosted by The Economist in NYC, Audrey Choi, Chief Executive of Morgan Stanley’s Institute for Sustainable Investing, said there is research that shows that 70% of investors want to […]Continue reading...

No lumber, no slumber: Canadian robo steps up

As I point out in my recent report on robo advisors in Canada, price points for digital advisors are on the high side, even for the lumbering Canadian advice market. Especially as these robos are not known for standout service, as other bloggers have noted. So should it be a surprise that Invesco Canada has developed plans […]Continue reading...

Technology, Training & Compliance in Light of the Fiduciary Standard

Capturing retirement assets is paramount for brokerages. When thinking about the word saving, it is hard not to think about retirement.  Brokerages are constantly looking for rollover assets, and as baby boomers retire, this search has never been more significant — which is why, when the DoL Fiduciary Rule was proposed, brokerages quickly reacted.   […]Continue reading...

In the world of robo 2017, C.A.S.H. is king

For those of you who seek yearly prognostication, here we go. I see four factors or trends driving the evolution of robo world in 2017, and attempt to capture them here with a simple, suitable acronym: C.A.S.H. Cross border activity: We’re now seeing robo advisors extend their reach across national borders. This is not just the […]Continue reading...