Huge growth in online wealth management

Despite the economic downturn, leading UK financial firms are committed to developing online wealth management services, research...

Despite the economic downturn, leading UK financial firms are committed to developing online wealth management services, research has found.

Seventy seven per cent of UK investment management firms questioned by Byline Research said they planned to offer an online wealth management service for elite high-earners within the next two years.

Client demand and the ease of delivering services online were the main reasons cited for developing these services.

The demands for high-quality service and security could provide opportunities for IT professionals with the right skills and experience.

Tipped as the next big growth area in financial services, wealth management is seen by companies in the field as an ideal way to retain their most valuable customers and poach other high-earning clients.

So far, however, relatively few companies have developed sophisticated wealth management services that can be delivered online.

Customer concerns about security and the integration of services with existing IT systems, were seen as obstacles to delivering wealth management online.

These services manage the accounts and savings of "high net worth" customers - wealthy individuals with between $500,000 (£344,000) and $5m in liquid assets.

The biggest technology challenges in developing services highlighted in the survey - integration and security - are not new.

Security was the biggest IT-related concern, cited as an obstacle by 53% of respondents. The second biggest was integrating IT systems to support new wealth management services.

Part of the security challenge is to gain the trust of clients whose financial affairs will be managed and viewed online.

Investment firms need to buy the latest digital certificate technology to replace existing password-based security, according to Nigel Brooking, product manager at e-business financial services supplier iE, which commissioned the research.

Financial services firms will also have to work hard to make sure that their ageing back-office systems can pipe information to new wealth management Web applications, Brooking added.

Older back-office systems, which do not use emerging data standards such as XML, could prove tricky to integrate, he warned.

A growing number of financial firms, such as real-time settlement provider Crest, have used middleware software to integrate sprawling IT systems.

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