As banks strive to further integrate their wealth management businesses, 29% of bank and trust advisors consider technology very important when evaluating their current firm versus another one in the industry and 51% consider it somewhat important, according to a report released Tuesday by Cerulli Associates.
Investment in technology can be a core way for banks to reduce advisor attrition, improve a firm's efficiency/productivity and enhance clients' experience, the report said.
After recruiting and retaining talent, Cerulli finds, 62% of private bank and bank trust executives say client experience/digital offering is the biggest challenge for their wealth management businesses, and 44% cite technology systems as the top challenge.
"As banks cede market share amid accelerating advisor movement into independent channels, these firms are looking at differentiating through their technology stacks," Matt Zampariolo, a Cerulli research analyst, said in a statement.
In fact, the report said technology in the bank channel has moved to the forefront in the past 12 to 18 months, with tools such as e-signature, digital advisor-client interfacing tools and financial planning tools at the forefront for implementation.
Nine in 10 banks leverage financial planning tools, according to the research. These are also used by most advisors who have access to them — only 8% of advisors have not yet integrated such tools into their practice.
Cerulli said this demonstrates that financial planning tools have become table stakes and are a critical input into an efficient and effective wealth management relationship.
The research further showed that just 29% of advisors at retail banks integrate artificial intelligence solutions into their practices, compared with 56% of advisors at private banks. However, retail bank advisors anticipate a huge increase in AI use over the next two years, with only 23% saying they do not plan to have AI use in their practice in 2027.
For their part, some 40% of U.S. investors surveyed by Cerulli said they are comfortable with AI tools being integrated into their financial provider relationship. But these comfort levels are skewed largely toward younger investors; older ones are much more skeptical.
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