2016fibapresentationcapgeminimay06finalsharing 160729061137 PDF

Wealth Management in
the Digital Age

May, 2016
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Capgemini Financial Services USA Inc.
WM in the Digital Age | 2016 FIBA Presentation | Capgemini Financial Services 2

The information contained in this [document, presentation] is proprietary Copyright © Capgemini 2016. All Rights Reserved
Introduction
Tej Vakta,
Senior Leader – Global Capital Markets
Capgemini Financial Services
Tej.Vakta@Capgemini.com
Over the past 20+ years I have been helping financial services institutions develop strategic vision and identify innovative solutions to
enhance revenues and improve operations in the fast-paced global financial industry. With industry experience in banking and capital
markets, I have first-hand knowledge of financial standards and market trends to help financial firms leverage capabilities to enhance
productivity and financial performance.
About Capgemini
With more than 180,000 people in over 40 countries, Capgemini is one of the world's foremost providers of consulting, technology and outsourcing
services. The Group reported 2015 global revenues of EUR 11.9 billion. Together with its clients, Capgemini creates and delivers business, technology
and digital solutions that fit their needs, enabling them to achieve innovation and competitiveness. A deeply multicultural organization, Capgemini has
developed its own way of working, the Collaborative Business Experience™, and draws on Rightshore®, its worldwide delivery model.
Learn more about us at www.capgemini.com.

For over 19 years, the Capgemini’s World Wealth Report has been the benchmark for
leading global wealth management insights
Changing HNWI Offshore vs. Change and Ultra-HNWIs Specialized Europe vs. North Impact of New Institution-
Behaviors Onshore Capital Innovation in Products and America HNWIs Market Realities Like HNWI
Flows Private Banking Strategies on HNWIs Behaviors
Mid-Tier Globalization Needs- Meeting Needs Adapting to Change in Leveraging Developing

Millionaire and Wealth Based Client of Growth New Market Investor Psyche Enterprise Scalable
Challenge Transfer Service Models Markets Realities post Crisis Value Business Models
Regulatory Digital: Addressing Evolving Role

Impacts on WM The New WM Mandate of Financial Advisor
Firms and their
Clients

Global HNWI population grew 6.7% and wealth 7.2%
Global HNWI population

and wealth expanded at
moderate rates of 6.7%
and 7.2% respectively in
2014
Ultra-HNWIs as well as
Asia-Pacific and North
America regions drove the
growth of HNWI population
and wealth
Global HNWI wealth is

forecast to cross US$70
trillion by 2017, growing at
an annualized rate of 7.7%
from the end of 2014
through 2017
Source: Capgemini and RBC Wealth Management Global HNW Insights Survey, 2015

U.S. HNWI population grew 8.6% to reach 4.4 million
U.S. and Top 12 MSA HNWI Population (000s), 2009–2014
Growth aided by markets of West Coast and Texas

Note: The totals for all years are expressed in millions and the 000s in the chart title do not apply to those numbers; Chart numbers and quoted percentages may not add up due to rounding
Source: Capgemini Financial Services Analysis, 2015

HNWI population and Wealth Growth, Gross Metropolitan Product Growth, Real Estate
Growth and Unemployment Rate for Top 12 US MSAs
NA HNWIs’ major concern relates to rising costs and top needs are investment performance
and understanding of needs
Top Five Concerns and Wealth Needs of North America HNWIs (% Respondents)
Concerns Wealth Needs
North Global Global North Global Global

America Rank America Rank
1 Rising costs of 74.1% 68.7% 3 Strong investment 86.3% 72.5% 3

healthcare performance
Ensuring my assets will Ability to understand my

73.6% 58.7% 2 85.6% 72.0% 4
2 last throughout my concerns and needs
lifetime
Wealth managed with a

3 My and my family’s health 70.7% 66.2% 1 clear understanding of 84.8% 73.2% 1
risk tolerance
4
Being able to afford the Timely and detailed
lifestyle I want in 66.1% 62.8% 4 statement and overall 82.1% 69.4% 6
retirement reporting quality
The impact of the Quick and effective

5 economy on my ability to 64.3% 58.7% 6 resolution of service 80.9% 69.6% 11
meet my financial goals related issues
Overall level of concerns and importance of wealth needs higher in North America.

To enable financial advisors, firms need to understand HNWI needs and adapt
accordingly
Path Forward for Firms
UNDERSTAND INVEST IN ENGAGE, EQUIP,

EVOLVE ADVICE
HNWI AND SPECIFIC HIGH- AND EMPOWER
MODEL TO
INDUSTRY PRIORITY FINANCIAL
RESPOND
DYNAMICS CAPABILITIES ADVISORS
Foundation Specific Actions
Most Important Firm Capabilities which Financial Advisors believe are

important to fulfill HNWI needs:
 Strong wealth planning Tools – 81% of financial advisors
 Access to firm or 3rd party experts – 72% of financial advisors

Source: Capgemini Financial Services Analysis, 2015
Digital Landscape in Wealth Management

Today’s customer is at the center of digital disruption across all industries
Customers Dealing with Digital in their Everyday Lives
Source: Capgemini Financial Services Analysis, 2016 WM in the Digital Age | 2016 FIBA Presentation | Capgemini Financial Services 11
Five fundamental forces are driving this even stronger
Customers Dealing with Digital in their Everyday Lives
 Google has driven the information

1. Information age through an individual’s ability to
“Google- find a wide variety of information
2. Answers
ification” quickly, easily, and for free
 Apple has established the customer

1. Experience “Apple- experience at the center of a firm’s
2. Intuitive ification” strategy
Top Two
Words to “Amazon-  Amazon was one of the first firms to
Describe 1. Predictive ification” articulate and deliver predictive and
2. Contextual contextual shopping experience
“Facebook-  Facebook drove widespread

1. Social ification”
adoption of social interactions and
2. Collaboration digital presence
 Uber has transformed the meaning

1. On-demand “Uber- of convenience and customer
2. Convenience ification”
experience
As expected, wealth management customers also have a high demand for digital, led
by younger HNWIs
HNWIs Considering Entire or Most of Current WM Relationship to be Digital Currently
and Five Years in Future, by Age
Current Future
100%
u v
83%
77%
75% 70%
64%
57% 59%
54%
48% 48%
50%
40%
25%
0%
Global Under 40 Age 40-49 Age 50-59 Age 60+
Questions asked:
u “To what extent would you say that your wealth management relationship is CURRENTLY conducted through digital channels?”
“In FIVE YEARS, to what extent would you like your wealth management relationship to be conducted through digital channels?”,
v and “Thinking about your wider retail experience, to what extent do you CURRENTLY buy personal items, such as clothes or books,
through digital channels?”
Source: Capgemini Financial Services Analysis, 2016; Capgemini and RBC Wealth Management World Wealth Report 2015 WM in the Digital Age | 2016 FIBA Presentation | Capgemini Financial Services 13
Younger U.S. HNWIs also exhibit higher demand for digital interactions
Key Digital Demand Differences by Age, Q1 2014 and Q1 2015
u u
v v
w w
Questions asked (Digital):

u “Please indicate whether digital contact (internet, mobile, email) is more important to you than
direct and personal contact?”
v “To what extent would you say that your wealth management relationship is CURRENTLY
conducted through digital channels?”
w “If your main wealth management provider could not offer this type of integrated wealth
management experience, would it prompt you to consider moving to another firm?”
However, wealth management firms and industry seems to be lagging behind on the
digital evolution
Computer
Industry
Industry
Music
1960s 1970s 1980s 1990s 2000-2015

Industry
Banking
Management
Wealth
SELF-SERVICE WEBSITE /
LITE MOBILITY APPs
The demand for digital by next generation will help push disruptive financial services
into mainstream adoption
ROBO-ADVISORS
Automated advice represents a huge potential
market for wealth management firms, with
HNWIs alone willing to allocate $7.3mn to
these models by 2017
MOBILE WALLET CROWDFUNDING

The global market for mobile wallet is
expected to reach $2.7tn by 2020, driven by The global crowdfunding industry raised
proliferation of smartphones, internet, and $34.4bn In 2015, increasing by 112.3% from
increasing merchant acceptance of mPOS $16.2bn in 2014
terminal
P2P PAYMENTS WEARABLES
The overall market for wearable technology

The mobile P2P transactions volume is is expected to reach $31.3bn by 2020,
expected to reach $86bn in the U.S. by 2018 growing at a CAGR of 17.8% between 2015
and 2020
Source: Capgemini Financial Services Analysis, 2016; http://dazeinfo.com/2016/01/12/crowdfunding-industry-34-4-billion-surpass-vc-2016/;

http://www.marketsandmarkets.com/PressReleases/wearable-electronics.asp; http://www.businessinsider.in/THE-PEER-TO-PEER-PAYMENTS-REPORT-The-exploding-
market-for-smartphone-apps-that-transfer-money/articleshow/47114852.cms
In fact, more and more fintechs are already targeting wealth management industry…
Select Examples of Fintech Players Disrupting the Wealth Management Industry
Client Client Provision of Wealth

Acquisition Profiling Advisory Services Management
SUPPORT FUNCTIONS (IT, COMPLIANCE, FINANCE, MARKETING, ETC.)
This is how far digital loyalty goes, first official digital wedding on blockchain
took
Blockchain wedding
First blockchain wedding took place at Disneyland, FL.
David Mondrus and Joyce Bayo registered their wedding
agreement on the blockchain, eliminating the role of both
religious and government officials.
Source: Capgemini Financial Services Analysis, 2016 and publicly available sources WM in the Digital Age | 2016 FIBA Presentation | Capgemini Financial Services 18
… With a lot of demand in the automated advisory area
HNWI and Financial Advisor Assessment of HNWI Propensity to Use
Automated Advisory Services, Q1 2015
80% 76%
70%
Percentage of Respondents
60% 52%
49% 46%
40% 32% 33%
20% 19% 18%

20% 16% 14%
0%
Latin America
Japan
Global
Europe
(excl. Japan)
North America
Asia-Pacific
HNWI Wealth Manager
However, financial advisors seem to be underestimating the demand.

Note: Questions asked: “Would you ever consider having a portion of your wealth managed by an automated advisory service”? “In your view, would your HNW clients consider having
a portion of their wealth managed by automated advisors”?
Source: Capgemini Financial Services Analysis, 2016; Capgemini and RBC Wealth Management, World Wealth Report 2015

Bridging the Digital Demand Gap

Advisors and firms are transitioning towards a new landscape with digital at the core
Shifting Wealth Management Advisory Landscape
Shift toward holistic approach

Growing prominence of fee-
to integrated wealth
based and discretionary
management including goals-
solutions and utilization of open
based performance
architecture
management
Digital
Delivery of the full capability of Transformation Focus on behavior-based
the firm segmentation
Use of multiple channels to

provide a seamless experience
across all channels
Firms need to build an effective digital strategy which engages clients and empowers
financial advisors
Effective Digital Strategy
Client Experience Advisor Enablement

Through digital, firms can provide clients with a better experience across three areas
of inform, engage, and transact
HWNIs have high propensity to leave their Wealth Management Firm due to
lack of digital relationship and integrated Channel experience
INFORM Products Content Performance

and and and
Simplified Services Education Review
Experience
Real-Time
ENGAGE Plan Propose Review
and and and
Advice On-board Collaborate
Collaborative
Multi-Channel TRANSACT
Implement Money Movement
and and
Execute Servicing

Select examples and best practices of client experience
USAA was the first financial institution

to deliver a speech-enabled virtual
assistant to its smartphone app users.
Since then USAA is adding more
capabilities for their members across
various types of accounts and services
(including performing transactions and
getting account information)
According to research from

Nuance, “the leading creator of
intelligent virtual assistants, 58%
of 18 to 25 year old smartphone
users are periodically interacting
with a speech-enabled virtual
assistant.”
Source: http://www.kioskmarketplace.com/videos/pnc-branches-out-in-a-small-way-2/
Next-Gen eStatements
Several leading firms are working on innovative
solution like interactive PDF to drive digital and
taking diversification from an intuitive concept
to a tangible portfolio attribute that can be
measured, visualized, and optimized by
launching a PDF on any device
Through digital, firms can enable advisors across three areas of inform, engage, and
transact
To enable advisors, firms need to invest in specific high-priority capabilities
and engage, equip, and empower their workforce
INFORM Products Content Performance

and and and
Unified Services Education Review
Experience
Real-Time
ENGAGE Plan Propose Review
and and and
Advice On-board Collaborate
Contextual
Collaborative TRANSACT
Implement Service
and and
Execute Practice Mgmt.

Select examples and best practices of advisor enablement
The Global Wealth business of the bank turns

to IBM Watson to help financial-planner
improve their advice
Example of what’s next for advisor enablement
Your Bot in Messenger
Client BOT Engine Your App

Your Bot in Devices

Your Bot in
Robo-Advisor / Virtual Assistant

Select examples and best practices of advisor enablement
Robo-Advisors
Advanced Analytics
Key Recommendations and Takeaways

Firms will need to consider an overall shift in the advisory model to align with the
shifting landscape
Current and Evolving Advisory Model in Wealth Management
Current Advisory Model Evolving Advisory Model
Review/
Introduction Discovery
of Goals
Client
Goals
Review of
Plan and
Value
Prepare
Added
Implemen-
tation
Implement
Plan and
Strategy
Digital disruption in wealth management is expected to be driven by Fintechs,
Blockchain, and AI led Robotics in coming years
Fintech Blockchain
Digital
Disruption in
Real Time
Wealth Blockchain technology has the
The digital revolution in financial Payments
Management potential of automating some
services industry is on the go, but intermediary trusted services
the brunt on current players is yet currently performed by banks.
to be seen. Numerous fintech Financial service firms need to
firms are challenging banks in invest in R&D, new
almost every product (including ventures/fintech firms in order to
lending, payments, forex etc.) in achieve results complementary to
their portfolio their business goals
AI and Robotic revolution
Robos and artificial intelligence is capable of

reducing costs, increasing skills, and
improving customer experience, which might
result in them taking over certain finest
activities currently performed manually in
financial services industry
In addition to enhancing advisory model, firms/ financial advisors can re-align their
business model in order to adapt to new reality
Evolving Business Model
Automated Advisory Hybrid Advice Model Financial Planning Model

Model
Traditional human touch and Providing holistic/customized
Primarily relies on technology to technology advisory services co- advice through frequent human
manage investments, and caters to exist within a WM firm, with primary interactions and involves assistance
HNWIs not requiring the personal goal being interdependence in risk management, legacy, estate,
touch. and tax planning, and charitable
giving
Model Spectrum
Digital-Led Financial Advisor-Led
The industry sweet-spot for the majority of firms is likely to be in the hybrid advice model.
Firms will need undergo a digital transformation which can focus on developing a
digital mindset complemented by tactical steps
High-Level Digital Prioritization Roadmap in Wealth Management
Core/Strategic Focus Transformation Focus
Develop ROI model/ cross-enterprise

Shift the business mindset
support
Develop big data and artificial

Make build vs. buy decisions
intelligence opportunities
Implement quick wins

Partner / Collaborate with FinTechs
to build momentum
Engage and educate financial advisors
Strategic Recommendation Transformation Recommendation
Note: Steps do not necessarily need to be taken sequentially

KEY TAKEAWAYS
Key Takeaway 1
SCAN
Assess your current state and benchmark against your peers across inform, engage, and transact (DMA)
Key Takeaway 2
FOCUS
Identify key client-facing and FA supporting needs to develop a comprehensive digital strategy that simplifies
advisor-client collaboration and drive loyalty
Key Takeaway 3
ACT
Embark on your iterative transformation journey

Tej Vakta,
Senior Leader – Global Capital Markets
Capgemini Financial Services
Tej.Vakta@Capgemini.com
About Capgemini
With more than 180,000 people in over 40 countries, Capgemini is one of the
world's foremost providers of consulting, technology and outsourcing services. The
Group reported 2015 global revenues of EUR 11.9 billion. Together with its clients,
Capgemini creates and delivers business, technology and digital solutions that fit
their needs, enabling them to achieve innovation and competitiveness. A deeply
multicultural organization, Capgemini has developed its own way of working, the
Collaborative Business Experience™, and draws on Rightshore®, its worldwide
delivery model.
Learn more about us at www.capgemini.com.
www.capgemini.com
The information contained in this presentation is proprietary.

© 2016 Capgemini. All rights reserved. Rightshore® is a trademark belonging to Capgemini

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Wealth Management in

the Digital Age

NOTICE TO THE RECIPIENT OF THIS PRESENTATION (“Recipient”)

Capgemini Financial Services USA Inc.

WM in the Digital Age | 2016 FIBA Presentation | Capgemini Financial Services 2

WM in the Digital Age | 2016 FIBA Presentation | Capgemini Financial Services 3

Mid-Tier Globalization Needs- Meeting Needs Adapting to Change in Leveraging Developing

Regulatory Digital: Addressing Evolving Role

WM in the Digital Age | 2016 FIBA Presentation | Capgemini Financial Services 4

Global HNWI population

Global HNWI wealth is

WM in the Digital Age | 2016 FIBA Presentation | Capgemini Financial Services 5

Growth aided by markets of West Coast and Texas

WM in the Digital Age | 2016 FIBA Presentation | Capgemini Financial Services 6

Concerns Wealth Needs

North Global Global North Global Global

1 Rising costs of 74.1% 68.7% 3 Strong investment 86.3% 72.5% 3

Ensuring my assets will Ability to understand my

Wealth managed with a

The impact of the Quick and effective

WM in the Digital Age | 2016 FIBA Presentation | Capgemini Financial Services 8

Path Forward for Firms

UNDERSTAND INVEST IN ENGAGE, EQUIP,

Foundation Specific Actions

Most Important Firm Capabilities which Financial Advisors believe are

 Strong wealth planning Tools – 81% of financial advisors

 Access to firm or 3rd party experts – 72% of financial advisors

WM in the Digital Age | 2016 FIBA Presentation | Capgemini Financial Services 10

 Google has driven the information

 Apple has established the customer

“Facebook-  Facebook drove widespread

 Uber has transformed the meaning

Questions asked (Digital):

1960s 1970s 1980s 1990s 2000-2015

MOBILE WALLET CROWDFUNDING

P2P PAYMENTS WEARABLES

The overall market for wearable technology

Source: Capgemini Financial Services Analysis, 2016; http://dazeinfo.com/2016/01/12/crowdfunding-industry-34-4-billion-surpass-vc-2016/;

Client Client Provision of Wealth

SUPPORT FUNCTIONS (IT, COMPLIANCE, FINANCE, MARKETING, ETC.)

20% 19% 18%

However, financial advisors seem to be underestimating the demand.

WM in the Digital Age | 2016 FIBA Presentation | Capgemini Financial Services 19

WM in the Digital Age | 2016 FIBA Presentation | Capgemini Financial Services 20

Shift toward holistic approach

Use of multiple channels to

Effective Digital Strategy

Client Experience Advisor Enablement

WM in the Digital Age | 2016 FIBA Presentation | Capgemini Financial Services 22

INFORM Products Content Performance

WM in the Digital Age | 2016 FIBA Presentation | Capgemini Financial Services 23

USAA was the first financial institution

According to research from

INFORM Products Content Performance

WM in the Digital Age | 2016 FIBA Presentation | Capgemini Financial Services 29

The Global Wealth business of the bank turns

Client BOT Engine Your App

Client BOT Engine Your App

Client BOT Engine Your App

WM in the Digital Age | 2016 FIBA Presentation | Capgemini Financial Services 36

Robos and artificial intelligence is capable of

Automated Advisory Hybrid Advice Model Financial Planning Model

Digital-Led Financial Advisor-Led