Innovation is necessary to increase market share and revenue to survive in fast-paced industries such as wealth management. But often, when institutions fail to innovate, product problems, process shortfalls, and people problems such as losing top talent and clients can occur.
While most modern wealth management institutions embrace innovation as part of their culture and vision in theory, there are several barriers to entry which can limit the level of innovation they’re able to bring to fruition. For example:
Focusing on the short-term vs. long-term company goals- Some organizations may be hyper-focused on short-term returns, limiting their ability to make strategic decisions and technology overhauls which can benefit the company in the long-term.
Clashing of traditional vs. modern culture- WealthTech has not historically been an innovation hub, and some institutions may continue to find themselves falling victim to traditional thinking. The notion of, “this is the way we’ve always done things, so this is the way we’re going to do them.” But it doesn’t have to be this way–firms open to embracing new technologies and ways of doing things greatly expand their revenue potential in the long-run.
Limited internal resources– Despite the size of some institutions, they often need more qualified people for development, product, or other key teams. With limited internal resources ,these internal teams are usually focused on keeping legacy systems running with no time to source or develop infrastructure technologies that meet the changing institution’s future needs.
Lack of access to high-quality, accurate data- With the sheer number of data sources available to modern businesses, creating a centralized access point for data can be a significant challenge.
Challenges with custodial data- Institutions often use legacy systems that operate on single-point data, causing lags in real-time exchanges versus direct custodial data that exchanges and refreshes via API in real-time. Challenges with custodial data access are not only common, but can greatly limit an institution’s ability to put that data to work and create unique experiences for their customers.
Data quality- Challenges with data standardization and enrichment eat into organizational bandwidth and create a greater level of risk. In today’s market, data quality is a gold standard, and most organizations see this as a “make it or break it” in terms of their ability to effectively innovate.
Budget Dollars- One big reason innovation fails is a need for more budget. If there isn’t money available to build technology, conduct quality testing, etc., the project won’t even start. Institutions must set aside a budget for researching, developing, or licensing innovative technologies if they want to compete in the industry.
BridgeFT aims to address and eliminate many of the barriers that financial institutions experience when it comes to capacity for innovation. As BridgeFT CEO, Joe Stensland puts it: “BridgeFT helps wealth institutions with the heavy lifting around wealthtech infrastructure and the services it takes to build robust technology applications. Then they can focus their efforts on the things that truly differentiate them and provide better outcomes for their clients.”
Innovation must be a priority for wealth institutions that want to be present in the market. Without innovation, they risk losing AUM, clients, advisors, and support staff. Once an organization prioritizes innovation, it scales more quickly than those lagging in this key area. BridgeFT’s mission is to empower limitless innovation for FinTech, financial institutions, TAMPs, advisors, and more.