Research commissioned by Callata & Wouters has found that the three key challenges for wealth managers over the next two years are risk, compliance and cost effectiveness. The research, conducted by LoudHouse, also show that IT systems are perceived as being critical to addressing these challenges with 94% of wealth managers suggesting that IT was either very important or quite important.
Despite IT being perceived as an enabler, there is a significant lack of awareness among wealth managers about the IT strategies deployed to meet these targets. In fact 63% of wealth managers did not know whether their IT systems were based in-house or had been outsourced. Given the fact that IT systems are perceived as critical to success, it is surprising that so many within the industry are unaware of what their options are.
This gap is further evidenced by the fact that 81% of wealth managers thought that their cost effectiveness was good or excellent, yet only 35% rated their companys use of outsourcing equally highly. In fact only 35% of respondents outsourced any IT at all. However, of those companies that did outsource IT, the most commonly outsourced part was the back office at 22.4%. It seems that organisations still have a long way to go when deciding how to use technology to their best advantage. However among those who are outsourcing IT, the focus is on the back office. This may be explained by the industrys focus on cost and risk reduction as well as regulatory compliance. Many banks use legacy technology which is unable to meet these demands and, consequently, outsourcing can provide one way for banks to ensure their systems are up to date.
These findings show that among firms that do outsource, back office systems are leading the way, says Marc De Groote, CEO, Callata & Wouters. However, despite having been on the agenda for some time, outsourcing is clearly still misunderstood. As wealth managers look to tackle cost, risk and compliance, a better awareness of the benefits of outsourcing is a must. For example, it allows wealth managers to benefit from best in class technologies which provide the flexibility and scalability required to meet customer demands. Furthermore, by enabling shared ownership, it also reduces operational risk and costs.
The survey results are based on responses from 125 wealth managers operating in the UK and were gathered during September 2009.
D.C.