The better the question. The better the answer.�The better the world works.
Are you supporting tomorrow’s
wealth management with
yesterday’s technology?
Accelerating the transformation of
wealth management through digital technology
Digital Disruption in Wealth Management
Page 2 28 November 2017 Digital Disruption in Wealth Management
OverviewDigital Disruption in Wealth Management
Contacts
Methodology
► Global report on technology transformation in wealth management issued for the second time
► Report based on detailed industry analysis of the following sources
► Global survey and face-to-face interviews with IT executives and technology leaders of
30+ leading wealth managers across EMEA, Asia Pacific and Americas
► Proprietary database covering technology spend and return on investment of wealth managers globally
Purpose of this presentation
► This presentation summarizes the key findings of the global report specific to Switzerland, i.e., for
► Swiss wealth managers and
► Switzerland as a wealth management hub
Dr. Robert Rümmler
Ernst & Young AG
Senior Manager
Phone: +41 58 289 42 67
Tom Schmidt
Ernst & Young AG
Partner
Phone: +41 58 289 64 77
Page 3 28 November 2017 Digital Disruption in Wealth Management
Swiss wealth managers are not driving technology leadership
(1 of 3)
Source: EY analysis
No IT strategy for
digital transformation
defined
IT strategy for digital
transformation
under development
IT strategy for digital
transformation
defined and agreed
17
50
33
% of respondents who agree or strongly agree
Which of these statements best describes your IT strategy for digital transformation?
Only few Swiss wealth managers actually have an IT strategy for digital transformation
Page 4 28 November 2017 Digital Disruption in Wealth Management
Swiss wealth managers are not driving technology leadership
(2 of 3)
Source: EY analysis
What level of disruption do you expect over the next 2 to 3 years from the following sources?
Swiss wealth managers are still preoccupied with ensuring compliance with changing regulatory requirements
New compliance and
regulatory requirements
Emerging technology
trends (e.g., mobile first,
robotics)
Emerging business
models
(e.g., robo-advisors)
New IT processes
(e.g., agile and DevOps)
67
17
67
50
% of respondents who agree or strongly agree
Page 5 28 November 2017 Digital Disruption in Wealth Management
Swiss wealth managers are not driving technology leadership
(3 of 3)
Source: EY analysis
Swiss wealth managers do not use nor are even actively considering robotics-driven process automation
Cloud infrastructurewe currently operate cloud
technology or are actively
considering its deployment
Big data analyticswe currently operate big
data technology or are
actively considering its
deployment
Robotic process
automationwe currently operate robotics
technology or are actively
considering its deployment
83
17
50
Please indicate the level to which certain technologies are deployed within your organization
% of respondents who agree or strongly agree
Page 6 28 November 2017 Digital Disruption in Wealth Management
Swiss wealth management is falling behind other international hubs
(1 of 4)
Source: EY analysis
While the rest of the world have their sights firmly fixed on revenue growth, Swiss wealth managers are largely
preoccupied with regulatory compliance
Which of these strategic business priorities is IT expected to have the most impact on?
% of respondents who agree or strongly agree
Switzerland
Regulatory compliance
Revenue growth and
protection
Operational efficiency
and improvement
33
33
83
58
79
63
Rest of the world
Page 7 28 November 2017 Digital Disruption in Wealth Management
Swiss wealth management is falling behind other international hubs
(2 of 4)
Source: EY analysis
Wealth managers in Asia Pacific are pushing for better innovation and digital capabilities much more than Switzerland
as a wealth management hub
What are your key objectives for your IT function over the coming years?
% of respondents who agree or strongly agree
Cost reduction
Stability
Time-to-market
improvement
Risk reduction
(e.g., cybersecurity)
Innovation and digital
capabilities
33
17
33
33
67
80
60
40
20
80
Switzerland Asia Pacific
Page 8 28 November 2017 Digital Disruption in Wealth Management
Swiss wealth management is falling behind other international hubs
(3 of 4)
In contrast to their Swiss counterparts, the vast majority of APAC wealth managers believe the digital transformation is
relevant in the short term
How relevant is digital transformation to your business in the short term?
% of respondents who agree or strongly agree
Source: EY analysis
Americas
33%
60%
Asia PacificSwitzerland
33%
38%
EMEIA
Page 9 28 November 2017 Digital Disruption in Wealth Management
Swiss wealth management is falling behind other international hubs
(4 of 4)
Source: EY analysis
Swiss wealth managers are hesitant to invest in third-party applications integration and other technology capabilities
How important are the following areas for your ongoing and future digital investments?
% of respondents who agree or strongly agree
Switzerland Rest of the world
Integration of third-party
applications e.g., application
programming interfaces
Investment in data
analytics capabilitiese.g., to support
personalization of offerings
Incorporating new
technologies e.g., cloud, big data,
robotics
83
83
57
96
83
88
Page 10 28 November 2017 Digital Disruption in Wealth Management
IT talent has become a key strategic resource that wealth managers
are going to increasingly struggle to attract and retain (1 of 2)
Demand for IT staff is continuously growing
% of total staff of wealth managers
Compensation gap is growing
Unit cost per staff, $ thousand
IT external staff
IT internal staff
+6.7%
1.7
6.7
2013
8.4
2014
2.8
6.7
9.5
2015
2.5
7.1
9.6
2016
3.0
7.2
10.2
2013
173
2014 2015 2016
104
171
+64%
106
167
+58%
107
166
+55%
111
+56%
Unit cost per IT internal staff
Unit cost per total internal staff
Source: EY analysis
Page 11 28 November 2017 Digital Disruption in Wealth Management
IT talent has become a key strategic resource that wealth managers
are going to increasingly struggle to attract and retain (2 of 2)
Source: EY analysis
Monetary incentives and a structured career path are not seen as effective measures to retain IT talent
What are the most effective means of attracting more talent for your IT function?
% of respondents who agree or strongly agree
Interesting challenges e.g., working with innovative
technology
83
Recognition as a valued
function50
Way of working e.g., collaboration and work
model
37
Monetary incentives 20
Structured career path 17
Page 12 28 November 2017 Digital Disruption in Wealth Management
Most wealth managers fail to capture value from outsourcing
Excessive outsourcing often results in much higher costs
Source: EY analysis
IT share of cost, %
IT outsourcing ratio, %
0 20 40 60 80
20
10
Value gap
∅ 35
Idealized trend line
Actual trend line
Page 13 28 November 2017 Digital Disruption in Wealth Management
Leading wealth managers spend less on their technology but
actually deliver more value to their organization
Source: EY analysis
Top performers Bottom performersBest practice Trend lineBubble size represents AuM
Business expense as % of operating income, %
Business efficiency contribution
Operating income per int. FTE, USD thousand
Revenue growth contribution
IT share of cost, %
0 5 10 15 20
90
80
70
60
50
IT spend per int. FTE, USD thousand
Top performers spend less on IT and keep their business
expenses low
Top performers generate more income while spending
less for their internal FTEs
0 20 40 60 80
600
500
400
300
200
100
Page 14 28 November 2017 Digital Disruption in Wealth Management
For too long, wealth managers have put off the long-overdue
modernization of their core IT platforms
Older core IT platforms cause much higher operating costs
Source: EY analysis1 Age of the oldest installed application of the core IT system
More than 10 yearsLess than 10 years
years
IT cost-income ratio
IT share of cost
Age of core IT platform1
1.4x
6.78.6
9.412.0
Page 15 28 November 2017 Digital Disruption in Wealth Management
Cybersecurity is still largely neglected by wealth managers
Source: EY analysis
Compliance is still seen as far more important than risk reduction despite the increasing frequency and severity
of cyberattacks
Which of these strategic business priorities is IT expected to have the most
impact on?
% of respondents who agree or strongly agree
Regulatory compliance
Revenue growth and
protection
80
57
Operational efficiency and
improvement
53Risk reduction
(e.g., cybersecurity)
53
Page 16 28 November 2017 Digital Disruption in Wealth Management
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