Looking Past Digital Transformation

Digital transformation discussions usually focus on the ROI of saving time, money, and effort, but the true strategic benefits are not just about these savings. Going beyond operational efficiencies, digital transformation positions and enables a firm with the ability to not just survive but thrive as a business in today’s digital-centric world. A forward-looking mindset and strategy needs to be applied to this operational endeavor to capture its full competitive rewards. While it is not too late to catch up in digitizing your business, firms need to position themselves at the right place along this digital path and be aware that “digital transformation” efforts are shifting to the “digital optimization” stage.

The key steps here are to build the ability to use all your data to function as intelligent systems and to design products and services as essentially “intelligent” offerings. We have to learn how to think about these issues because they go far beyond a purely operational perspective.

Another important point to consider was brought up in a recent WealthManagement.com article “Time for the Most-in- One Tech Solution to Rule the Back Office” where it was proposed that the search for a comprehensive technology platform solution may not be the best strategy to get the outcome you are looking for. In other words, the recommendation is to do not try to get someone to do it all for you.

To explore this further, we reached out to Institute member Ryan George, Chief Marketing Officer of Docupace – a financial technology company that has created a cloud-based, digital operations platform with data-driven client onboarding, unified workflow, and document management automation capabilities. Our goal in this interview is to better understand how implementing a digital transformation for your firm can enable strategic advantage and competitive positioning. Ryan has some interesting thoughts to share on this topic.

Hortz: Can you explain your perspective on the different paths or options financial firms have toward their digital transformation efforts?

George: That’s perhaps the greatest challenge for firms – the sheer number of paths and options. Let’s try and create some categorical differences.

First, let’s differentiate the front office from the back office. Front office are the client-facing tools, like client portals, client/advisor onboarding solutions, financial plan creation tools, etc. Back office, which is Docupace’s bread and butter, typically covers data aggregation, compliance, account opening/maintenance, document management and storage, audit, and reporting.

On both sides, firms have looked to custodians and platform TAMPs to provide “all-in-one” capabilities within a single technology solution. While this covers much of baseline business practices, it sacrifices optimization, user experience, and other strategic benefits for convenience.

Hortz: What are some of the growing gaps advisors are reacting to in the all-in-one legacy platforms at the wirehouses, custodians, and independent broker-dealers?

George: For years, the “all-in-one” approach worked well enough for financial advisors and clients, but times have changed. The industry has evolved and independence is the flag most advisory firms wrap around themselves these days. In addition, gaps in these offerings have widened as client and advisor demands have shifted.

That last point is a predominant reason why there is a revolution afoot in the back office. Wealth management firms looking to achieve scalable back office operations are looking beyond traditional choices of either an all-in-one technology solution or an array of individual plug-and-play products. Many are opting for a Goldilocks solution, or middle-ground approach, that focuses on technology providers who deliver a “most-in-one” platform as a better solution and know where to find and integrate other key technologies as needed.

Hortz: How can firms start moving from digital transformation to the digital optimization stage?

George: Believe it or not, digital transformation was yesterday. Today, wealth management firms should be optimizing the digital experience they deliver, not building it from scratch. However, it’s a broad industry with many different types of advice providers so I understand digital optimization is aspirational for many.

It can be very disheartening though for firms that feel like they are way behind, but I encourage them to throw their energy into just heading in the right direction rather than do nothing. Pick an area of the business – such as client/prospect engagement. Ask yourselves: Are there any small steps and/or technology solutions that can positively impact this area? It’s an ever-changing continuum and firms should view what they deliver relative to the digital experience and solutions available.

Hortz: Can you share a few client examples that illustrate how this shift is materializing and the benefits it may provide?

George: Firms that need a faster, more secure back-office would be best served with this rise of the “most-in-one” alternative option.

The first example I can think of is RBC Wealth Management, a custodian that has transformed itself over the past couple of years – specifically in terms of digital transformation and optimization. For a number of reasons, RBC had found themselves in conflict with advisors growing expectations about how technology should reduce inconveniences and improve their everyday interactions with the world. They were heavily paper-based and running on some dated systems. They made the critical decision to go from laggard to leader and brought in companies like Deloitte, Salesforce, Addepar, and Docupace to participate in this transformation. The result? Collectively, RBC was able to take 26 different systems and consolidate them into a single click.

Another firm worth pointing out is Cetera because they have taken a different approach to land at a similar result. As you know, Cetera has multiple broker/dealer groups that specialize in different areas of the market. What they have done is to look at all the dozens and dozens of processes across these groups, and sought out ways to eliminate, reduce or reinvent cumbersome/duplicative processes. It’s an example of how with the right people and the right mindset, you can transform a business even without having to transform your systems.

Hortz: Any recommendations or advice you can provide to financial firms on how they can design their digital efforts towards the biggest strategic outcomes they should be focusing on?

George: The best thing many firms can do to put their best foot forward is start asking questions: Is this technology a critical driver of my firm’s success? Does this technology have an internal champion or SME at my firm? Is this technology connected to other systems/platforms of the firm? Does the technology improve workflow, create efficiencies, or provide new more competitive ways to operate and engage advisors and their clients? Answering these questions (or not having an answer) can tell you a lot about your current state.

Operationally, partnering with an experienced “most-in-one” tech provider can bring in the majority of what is needed to run an efficient back-office and the knowledge of where to get new needed capabilities. Firms can rely on these providers to ensure the integration of tools and systems, bolting on additional solutions, when needed. This takes a large burden off the shoulders of CTOs and COOs.

I also recommend an annual roundtable discussion on firm technology to assess how the firm’s tech stack inhibits or enables different roles within the firm. An advisor may presume a technology is irrelevant but to the office manager or wealth management assistant, it’s critical. It is very important to understand those different use cases across all firm personas. These discussions will also help clarify what the independent digital landscape looks like today and build an understanding of where the industry is going.

Related: Why Advisors Are Investing in the Back Office, Efficiency and Workflows