Wealth managers need CRM technology

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By: Wise Marketer Staff |

Posted on July 6, 2002

Some wealth management organisations are not using technology as effectively as they should, according to the new World Wealth Report published by Cap Gemini Ernst & Young (CGEY) and Merrill Lynch. The report suggests, however, that improvement is likely.

Private banking services rely on their clients' relationships with their financial advisors. The report reveals that those relationships are often are improved through advances in information technology, asserting that effective customer relationship management (CRM) tools are critical in identifying changes in customer needs and delivering a better client experience.

"The wealth of high net worth individuals continues to grow, despite the recession," said Lars Weigl, solution team leader at CGEY. "And that general growth and interest in the high net worth market in the past few years has led to an increased demand for wealth management systems, technology improvements and upgrades. So, despite the world-wide recession, there is still significant interest in both wealth management and customer relationship management systems."

The strange revelation is that, despite the demand, many wealth management firms have still not got their CRM and information technology systems working properly.

CRM increases contact
The report suggests that the best wealth management providers will design and implement adaptive business processes, IT systems, and architectures that give them what they need to adapt their business services as client requirements change. Business processes and technologies must be able to anticipate and respond to change, and to enable integration with partners and outsourcing providers. Flexibility is going to be essential as open IT architectures proliferate, and the need to aggregate account information becomes more essential.

In CGEY's recent survey of private banks in Europe, it was found that only 38% of relationship managers have online access to information from a single source (such as a CRM solution). Around 60% of private banks were able to offer a meaningful client profile but it had to be built by combining information from a number of databases. In general, available client data is fragmented and stored in several databases.

The single view
The ideal situation is that all information can be presented in a single consolidated view of the client. The survey found that most clients prefer a consolidated statement of their accounts and portfolios, and of how their investments performed. To provide this many firms use a technique called 'screen-scraping', with only a few of the industry leaders using integrated solutions.

CRM systems can increase the efficiency of financial services firms in reaching and serving clients, lowering the administrative workload and streamlining the collation of data. And, if an advisor leaves the firm, they may take many of their clients and their knowledge of those clients. A firm should be able to access this data through CRM technology to be able to continue to serve those customers.

The report also forecasts that increased specialisation in the financial services value chain will create the need to switch easily between in-house and outsourced capabilities. For specialist providers, for example, this might involve outsourcing custody, transaction processing, administrative activities, technology infrastructure, application maintenance activities, and clearing and settlement.

It also identified segmentation as another important requirement of wealth management firms and their IT providers around the world. And yet, the report says, while 53% of firms were able to segment clients and potential clients based on a combination of personal and potential wealth, risk profile, lifestyle and needs, none were able to segment clients based on risk profile, lifestyle or needs alone.

World wealth rising
According to CGEY, the number of high net worth individuals worldwide grew by just under 200,000 (almost 3%) to 7.1 million last year. Their combined wealth also rose by around 3% to US$26.2 trillion in 2001, despite drops in most of the world's equity markets.

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