Wealth managers capture huge amounts of data on the UK’s richest individuals, but for the most part are behind the curve on how this is used.
The opportunity and challenge posed by data innovation and management was under discussion at a May roundtable hosted by PAM Insight and SIX, attended by senior industry figures.
Charles Boulton, the chief executive of HSBC Private Bank in the UK, said the bank was reasonably advanced in terms of its use of data to fuel client acquisition.
“One of the areas we’ve done work in is marrying up internal data on the [private] clients and corporates we work with, with externally available information on those corporates.
“This can provide a rich source of information from a client acquisition perspective. It helps us to understand where there might be opportunities with shareholders or principals beyond the direct relationships we already hold.”
Lisa Francis, CEO, UK Private Bank & Crown Dependencies for Barclays Private Bank, described how the bank had built a “data engine” – a means of breaking down internal silos.
Data security was also an area of focus – and Ms Francis believed the wealth management sector should be doing more to help clients be more data savvy and secure in their own systems.
“Scams are a huge concern, and we have really good controls as big institutions,” said Ms Francis.
“But [when it comes to] some very wealthy clients, some of their data controls and security aren’t quite as strong as the institution.
The chief operating officer at a multi-family office said the firm had been through a “challenging and expensive” journey to revamp its legacy systems and data warehouses.
“I think the future of our industry is data architects and data strategists,” he said.
“We had to really re-engineer how we looked at client and transaction data. Our future is all about how that data is serviced, making sure it’s accurate, high quality and secure. That has really been a significant transformation programme over the last few years and data is now at the heart of it.”
Attendees also identified ESG data as an area of challenge.
“A lot of the analytics around businesses and companies is still quite aged,” one said.
“When we were looking at building [our ESG offering], we found that when we were sourcing that data, the ESG factor was more around the governance.
“[Data providers] have historically been very good on the governance side, because that’s the easiest to pull – how many employees are there, what’s their financial situation, and so on. The E and S are more difficult – though it will get better.”
Attendees questioned whether there was more scope for the use of artificial intelligence and innovation in the wealth planning space – a type of “robo advice” clients with more complex tax and jurisdictional requirements.
“One area that is a winner, but no-one seems to be looking at it is in the wealth planning side where [you could have] a tool that really analyses the life of the client and produces a state-of-the-art model which complements your wealth planner,” said the multi-family office attendee.
The larger banks also said they were looking at ways in which client retention could be improved.
Mr Boulton said: “We are also looking at retention analytics so we can see when clients might be looking elsewhere, or have relationships elsewhere.”
PAM Insight and SIX are hosting a webinar on 'Why wealth managers of the future need a Chief Data Officer' on Thursday, 1 July between 9.30am and 10.30am. Register here.
