Online Wealth Management Solution for China Market
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As the online financial services market in China heats up, traditional joint venture or local financial services providers are eager to seek an expedited path to move online too. Here the author tries to explore a viable strategy from the empowering technology perspective for those financial services firms.
Transcript of Online Wealth Management Solution for China Market
Individual Wealth Management Market Size
Chinese HNWI had the largest growth in 2012
China Mainstream Urban Income Structure
Courtesy of McKinsey Inc.
Chinese mainstream income ratio will grow into 51% by 2020
Enterprise Asset Management Market Outlook
3.44 million private enterprise units in 2013 with
51,830 large size units (>¥10 million registered capital)
and 84,620 medium size units
(¥5 to $10 million registered capital)
¥4.214 trillion in registered capital
Online/Mobile Partnership Outlook
2013 Search Market Shares Categorized Top Sites
Online/Mobile Partnership Outlook
2012 Top 5 Apps on iPhone Categorized Top Sites
Challenges from Burgeoning Online Players
Baidu’s Baidu BaiFa § Launched on October, 2013
§ Partnered with China AMC
Tencent WeChat United Fund § Launched on December 2013
§ Partnered with China AMC, E FM,
GF FM, and China Universal AM
Alibaba YuErBao § Launched on June, 2013
§ Partnered with Tianhong AM
NetEase TianJin
§ Launched on December, 2013
§ Partnered with Tianjin
Jingdong网银在线 to be launched
Online New Player’s SWOT Analysis
Strength § Huge user base
§ High brand awareness
§ Fully self-service
§ Successful partnership with AM/FMCs
Opportunities § Competing with banks once the
licenses are granted
§ First move advantage
§ Technology power houses
Weakness § Simple product offerings hard to
meet sophisticated users’ needs
§ Guaranteed high return offerings are
more like marketing gimmick
Threat § Government policy shift
§ Conventional WM/AM/FM firms going
online too
§ Partnership goes wrong
Challenges for Sustainable Growth
Technology Challenge § Lack of deep online experience
§ Underutilized big data asset
§ Low agility to business changes
Business Challenges § Overly customized portfolios
§ Lack of reach to online users
§ Expected to play a truly independent
3rd party role
Resource Challenges § Hard to hire and retain top sales and
wealth managers
§ Labor cost is proportional to growth
Process Challenges § Lack of process maturity
§ Processes and workflows are not
fully integrated with other enterprise
applications
Strategy to Transform from Off-line to Online
Step 1. Set a High Bar for New Online Business
Step 2. Think from a fresh business perspective
Step 3. Focusing online
Step 4. Strategizing
Step 5. Implementing the strategy
1. Set a High Bar for New Online Business
Technology Positioning § Agile to business needs
§ Cloud based to provide SAAS/PAAS
§ Big Data for business analytics
§ Scalable to support huge user base
§ High performance
§ High security
§ Adaptable for oversea expansion
Business Positioning § To become the market leader in the
targeted user segmentation
§ Organizational transformation and
alignment to improve efficiency
§ Elevate the capability maturity in
process management
§ Improve the customer satisfaction
From off-line to online is a business transformation rather than a UI makeover
Technology to Serve the Business
HNWI
Online Subscriber
Reseller Online Partner
Private Enterprise
Operational Roles § Sales manager § Marketing manager § Customer WM advisor § CSR § Financial analyst § Online partner account
manager § Reseller account manager § Regulator relationship
manager
Operational Services § Financial product planning § Customer acquisition planning § Sales management § Marketing campaign management § Risk analysis § Reporting generation § HNWI prospect lead generation § Client behavior monitoring and
analysis § Regulatory compliance checking § Research & analysis
Business Processes § Prospect attraction § Customer profiling § Customer financial analysis § Customer investment planning § Plan implementation § Routine account management
Business Services § Client enrollment § Account opening § Asset allocation transaction § Portfolio construction § Performance projection § Risk alerting § Simulation § Portfolio monitoring § Client reporting
Servicing Channels § Branch office § Customer support center (Call
centers, social network, etc) § Customer self-service (Kiosk,
online, phone, etc) § Internet/Mobile partners (B2B) § Institutional resellers (B2B)
Servicing Recipients § Direct HNWI customers § Direct online subscribers § Internet/Mobile partner’s
online users § Institutional reseller’s
customers § Regulatory auditors
Interactive WM Servicing Model
2. Think from a Fresh Business Perspective
AM Customer
Deep Penetration § Self-service
WM as
employee
benefit
Retain Biz-owner § Single view of
multiple accounts
Customer
Satisfaction § Attract
young
HNWI
Aggressively Acquire
Mainstream Income
Customers § WM Self-service
Brand and Service
Awareness to Vast
Online users § Through
partnership
3. Understand the servicing targets
27!"#$ WORLD WEALTH REPORT
» A preference towards having access to multiple experts, a greater likelihood to seek advice on family wealth and perceive their needs as relatively more complex;
» A higher importance placed on digital versus direct personal contact with wealth managers.
HNWIs in developed markets, meanwhile, showed:
» A greater focus on preserving, rather than growing, wealth though also a high percentage of HNWIs with no clear preference for a particular strategy;
» Especially in North America, a strong preference toward maintaining relationships with a single firm and touch-point. This preference aligns well with their perception that their needs are generally more straightforward and focused on individual wealth.
This sampling of differences between HNWIs in emerging and developed markets indicates that wealth management firms need to tailor their approach to the diverse needs and expectations of their global clientele. For example, firms serving emerging-market HNWIs may need to upgrade their integrated models and improve training for individual
wealth managers to accommodate the relatively more complex needs of that clientele. Firms in these markets will also need to tailor the way they measure and report the performance of HNWI portfolios, and help them identify and meet their personal financial objectives, especially those in higher wealth bands who largely prefer to judge their portfolio’s success on an absolute basis.
With HNWIs exhibiting a strong demand for digital channels and with one-third preferring to oversee their own investments, wealth management firms will also need to define a delivery strategy that includes multiple channels. By providing a seamless experience across channels, firms stand to grow and deepen relationships with HNWIs. Most importantly, given the diversity of HNWI expectations and behavior patterns, wealth management firms will need to understand the nuances around age, region, gender, risk appetite, and source of wealth among HNWIs, and devise strategies accordingly to handle the diverse needs and expectations of their global clientele.
FIGURE 19. HNWI Preference for Direct Contact vs. Digital Contact by Age Band, Q1 2013
(%)
Age 60+
Age 50-59
Age 40-49
Under 40
Global30.7%
20.2%
24.0%
32.0%
38.2%
23.7%
29.1%
24.8%
22.9%
21.7%
Direct Contact Digital Contact
FIGURE 19. HNWI Preference for Direct Contact vs. Digital Contact by Age Band, Q1 2013
(% Respondents)
Note: Question asked on a 10-point spectrum: Please indicate whether direct and personal contact is more important to you than digital contact (internet, mobile, email) vs. digital contact (internet, mobile, email) more important to you than direct and personal contact? As we asked for preferences across a 10-point spectrum containing two extreme points, the above numbers in the figure indicate the percentage of respondents providing top three ratings at each extremeSource: Capgemini, RBC Wealth Management, and Scorpio Partnership Global HNW Insights Survey 2013
INAUGURAL GLOBAL HNW INSIGHTS SURVEY SETS INDUSTRY STANDARD FOR UNDERSTANDING HNWI PREFERENCES
Courtesy of Cap Gemini
Young wealthy generation prefers digital contact
WM Products & Services Priorities
Online Partner Cloud APIs
Young Affluent Professional
Online WM Requirements HNWI WM Know-‐how
Online WM Product Suite
HNWI Premium EdiDon
Online Partner Requirements
Cloud-based Architecture Model HNWI Online
Subscriber Reseller Online Partner
Private Enterprise
Content/ Media
Provider
Regulator
Trading Exchange
AM Business Services Management
WM Business Process Management
Common Services PlaGorm
AM Business Process Management
WM Business Services Management
Self-‐service Channel
Branch Office Channel Reseller Channel Online Partner
Channel Call-‐center Channel
Web Browser Client Mobile App Client B2B Web Services
Ope
raDo
nal
Services
Desktops
Big Data PlaGorm Financial Product PlaGorm
Trad
ing
Compliance
Cash M
gmt
Billing
Client DB
CRM
SFA
Research
Conten
t Mgm
t
Mon
eDzing
PorGolio
Mgm
t
Risk Ana
lysis
Distrib
uDon
Investmen
t Ch
anne
ls
Compliance
Repo
rDng
Wealth Advisor
Researcher
CSR
Partner Manager
Backend Enterprise
Applications
Sales Manager
Executive
IntegraD
on Bus
Investment Firm
Financial Service
Engineering Organization Alignment
Product & OperaDon Team
OperaDonal Tools Team
Client App Team
Data AnalyDcs Team
Partner Engineering
Team
Architecture Governance
Team
PlaLorm Services Team
QA Team
Financial Servicing/Modeling Team
OrganizaDon Development
Office
5. Implement the Strategy Business Strategy Implementation Guidelines § Executive’s buy-in and strong sponsorship
§ Secure budget commitment
§ Come up with a blueprint to guide through the implementation
§ Strong governance and review constantly on the state of the business
§ Fine-tune the plan when needed
Products & Services Strategy Implementation Guidelines § Fast time to market
§ Scalable operation
§ Secure & robust quality of services in the first place
Implement the Strategy (Cont.)
Technology Strategy Implementation Guidelines § Start from a smaller scope to address immediate business needs
§ Balance among open-source, commercial out of the shelf, and
home-grown technologies
§ With long-term technology blueprint in mind for cost-effectiveness
Organization Strategy Implementation Guidelines § Gradually develop and grow the engineering organization with business
justification
§ Address business continuity and succession planning in longer term
§ Maximally leverage and cooperate with other existing organizations
Key Success Factors to Track Online Business KSFs § User base growth
§ Daily active users growth
§ User stickiness improvement
§ Market share growth
§ User traffic growth
§ Paying customer base growth
§ User satisfaction level improvement
§ Lower technology TCO
§ ROI
Overall Business KSFs § Total portfolio capital growth
§ Lower user acquisition cost
§ Online monetization growth
§ Ease of regional expansion
§ Ease of global expansion
§ Per employee revenue contribution
improvement (business scalability)
