As the traditional banks grapple with disruptors and an enduring environment of low interest rates, a growing number are piling resources into a new business opportunity – wealth management.
Many banks stopped providing financial advice to clients around a decade ago, after the Retail Distribution Review (RDR) led to a ban on commissions. They still sometimes provide these services to the very wealthiest, who can afford to pay fees for the work. However, much of the sector is now dominated by specialist wealth management firms like Hargreaves Lansdown and St. James’s Place.
However, at a time when robo-advice options have grown popular among mass market customers, the banks see a new opportunity: combining technology with their traditional strengths in providing more personal advice. While technology handles simple, repetitive transactions, customer representatives have more time to help with more complex, nuanced enquiries or complaints. Technology also provides them with more relevant information in more accessible formats. The banks would still earn fees for such services, but automation means they can be lower, benefiting customers.