An overwhelming majority of wealth managers worldwide prefer to work with external parties on technology rather than focus on in-house development, according to a Citi survey.
The wealth management industry continues to face pressures from declining fees, low margins and increasing cost of regulation and compliance. Technology has been a major factor to help counter some of these challenges and wealth firms have to consider whether to develop solutions internally or seek help elsewhere.
According to a survey by Citi, an overwhelming 75 apparent of respondents prefer working with external parties as their preferred technology development strategy. 46 percent said they prefer a hybrid model that involves upgrading in-house system with third party tools.
To Outsource or Not?
The top areas that are unlikely to get outsourced include most of the client-facing activities such as onboarding and know-your-customer processes (56 percent), client services, reporting and data (50 percent), and compliance, regulatory and tax reporting (54 percent). 66 percent of respondents are also either already outsourcing or likely to consider outsourcing post-trade services.
«Based on our study, it is clear that the wealth industry is at an inflection point, and it is critical that wealth management providers […] need to get their operating model right,» said Andrew Pitt, head of research and content for Citi’s institutional client group. «Moving forward, we see trusted partnerships as key to success as consolidation continues.»
The survey is part of a study published by Citi Business Advisory Services, in partnership with Citi Securities Services. It includes quantitative and qualitative data gathered from 23 interviews and nearly 160 survey participants across retail, wealth, and private banking segments in APAC (40 percent), Europe (41 percent), and North America (17 percent).
