Sustainable innovation at scale. This is something we see as a framework for future success. It is something that works both as a concept and also as a tangible framework to use in practice. In simple terms, when a business is looking to innovate to improve or reconfigure any part of its operation, aligning to scale and sustainability will always pay dividends.

None of this is new, per se. Sustainability was first given a framework in the UN’s Sustainable Development Goals in 2001. Then, it set out its goals and objectives. Meanwhile, the concept of scalability is generically accepted as a pathway to success through growth. And innovation is, of course, key to moving a business forward. In combination, innovation, sustainability, and scalability are powerful. The idea is that everything a firm does to innovate and scale should be done with sustainability at its heart.

We think that within wealth management and WealthTech, there are three obvious elements: the client experience, the investments, and the technology as an efficiency play.

Client experience

Looking at client experience, this concept becomes real via constant evolution, a series of steps that work to improve the overall experience. It is a process that involves different parts of the whole and evolves along with the changing demand from clients and technological possibilities.

The overall aim is to align with the values and situations of the client – which are also perpetually changing depending on where they are in their particular lifecycle. So, this is not a static task with clear boundaries. But it is, however, something that will benefit from an innovative approach. Then scale will enable lower cost to serve and thus help the firm, leading to success. The final piece of the puzzle is embedding sustainability in the approach and in all the various iterations of the client experience project, no matter what that entails. Thus, the concept is to provide a framework where the wealth manager can innovate, scale, and add sustainability to the core of an evolving process.

Investment process

With the investment proposition, we can look to holistic planning and advice-led solutions; all now need a sustainable overlay as standard. When we look at the actual solutions, for example, socially responsible investment (SRI), and environmental social, and governance measures (ESG) are now very well understood. There has been regulatory enforcement regarding measuring and reporting a series of metrics and subsectors. Indeed, aligning data to a client’s end needs and wants has been much more fully explored in the recent past, and the range of investor end points, i.e., no sin, impact, etc., have also been formalised.

Within investing there is also a rethink in terms of how to define a sustainable portfolio; it is no longer a ‘shades of green scenario’, and now we would look to companies that have a diversified workforce, those that manufacture solar panels, those that efficiently recycle water, etc. The theme is generic sustainability rather than investing on a sectoral basis.

Thus, the innovation has been to provide the topography, thus providing the ability to analyse investments at scale, and with a remit to always include sustainability. We think this will see further focus as younger generations demand a more thorough approach and one that wealth managers will, accordingly, have to be robust and thorough about when it comes to reporting.

Technology

Holding the client experience and the investment piece together is the technology. This is obviously a key component in service delivery with digitisation at its heart.

Wealth managers will need to hold their appeal not just with the primary account holder but also need to have a business that is appealing to younger generations and the broader family. It’s about thinking beyond today’s wealthy and instead being forward-looking and thinking to meet future needs and preferences. There’s a whole technology-enabled service delivery piece around that and how to configure a business so that it holds appeal for the generations that will follow.

For example, for Gen Z, the theory was that they would be self-service. But that has not really been borne out by the reality – they still want the personal and the human touch. Another issue is that they are still in the wealth accumulation stage and unwilling to pay 1- 1.5% of their assets in service fees. So, the need is to innovate on the technology as it relates to service delivery as well as the way that the service is structured and, in doing so, bring down the cost to serve.

Technology is at the very heart of this. Its use can reduce the administrative, distribution, and research burden and thus the service model becomes more efficient and more sustainable too. In this way, technology boosts and scales the capabilities of the business – by leveraging the Cloud and linking to other third parties with expertise over APIs.

And within the back-office environment, technology is also key in creating automation and efficiency – that frees up time and resources. In this way, firms can use efficiency as the platform for scale. To that end, adding aggregation capabilities are particularly popular at the moment. They are an obvious scale play that combines all the disparate parts or components. The sustainability play lies in the fact that there is then less resource waste in doing things manually.

This is a great case of innovation bringing about greater scale and sustainability. An economy of scale reduces cost to serve and has a positive environmental impact.

In conclusion, framing things in this way, we think, creates a paradigm shift in how we all think about progressing our businesses. Continuous innovation has to lead to scale and has to have sustainability embedded in its ethos. Innovation stays relevant and supports scale because you get a new capability to scale.

This and much more will be further investigated in Objectway’s upcoming Customer Conference OWIN23, from leading voices in sustainable innovation and financial services, industry leaders and experts and our very own Objectway people, each bringing their unique insights and experiences on stage.

There is a lot to look forward to, but we personally look forward to welcoming you all in Venice!