4 Benefits of a 360-Degree Client View

“Without data you’re just another person with an opinion.”

–- W. Edwards Deming, Statistician, Professor, Author, Lecturer, and Consultant

According to a recent report on the wealth management by Deloitte, advisor preferences are changing due to evolving technology and the availability of accurate, relevant data at their fingertips. The most effective advisors are able to sift through a large number of data points that bring together industry benchmarks, marketing and opportunities data, and predictive models to make intelligent decisions about which client needs to be followed up with, about what product, and through what channel.
The increasing maturity of analytics capabilities and advances in data engineering create several challenges including achieving a 360-degree of the client. It is imperative that financial advisors have all relevant data points about a customer at their fingertips. Firms are making major investments in customer relationship management systems (CRMs) as they seek to understand and profile customer behavior.

As part of our work to help our enterprise wealth management clients get the most benefit from their data assets, Ezra Group has partnered with Xtiva Financial Systems to produce a series of webinars. Our goal is to bring leading industry experts in data strategy, data architecture and systems implementation to share their experiences and best practices.

We recently produced the fifth webinar in the series called, “Data Pollution: Don’t Let Your Data Lake Get Turned Into A Swamp” which included panelist David Benskin, CEO, WealthAccess.

In this article, we summarized David’s recommendations for building the data infrastructure necessary to deliver a 360-degree client view, how data lakes can be leveraged to solve complex client problems and way to resolve data fragmentation issues.

In case you missed this webinar, you can click here to unlock your access to the full recording.

A 360-Degree Client View is The Holy Grail

So what are some of the ways that you believe a data lake can help wealth management firms reach this goal of a 360 degree client view?360 degree client view

One of the best uses for data lakes is unifying existing books and records for enterprise wealth management firms and banks, Benskin proposed.  As an organization matures, they always have to support more legacy systems. This makes it challenging, if not impossible, to see a complete client view.

Benskin explained that his firm’s objective is to deliver technology that enables enterprises to collect, combine and enrich that data by leveraging data lakes.

There are several reasons why the books and records of wealth management firms are not unified, according to Benskin.  Banks and broker-dealers build or acquire new lines of business over the years including one or more RIAs, private banks and bank trusts as well, he said.

At Ezra Group, we see client firms working so hard to grow revenue and/or market share that they rarely stop to consolidate the technology platforms that are implemented for internal LOBs or come as part of external businesses, which results in multiple books and records being supported.

Banks often run into difficulties in consolidating data from other business lines, such as the commercial bank, where they have small business owners that may also have wealth management accounts.  This group of customers tend to stay loyal because they often have only one financial relationship, according to Javelin Research. But nearly 1 in 3 business owners will spread accounts and financial services across multiple institutions.

More commercial and retail banks have been expanding into wealth management services since data shows that it is often the most profitable line of business and a great place to put shareholder capital to work.

In the three years to the end of 2019, JPMorgan’s asset and wealth management division generated an average annual return on equity of 27%. Compare that with its other segments: consumer and community banking (25%), commercial banking (18%), and corporate and investment banking (15%), with a group-wide average of 14%.

Building a single view of the client is also complicated by multiple technology platforms including portfolio accounting, portfolio management, performance reporting, financial planning, CRM and others. It’s data that goes in (to their siloed systems) but doesn’t come back out, Benskin noted.

Benskin recommended going with a minimally disruptive approach of layering aggregation technology (like WealthAccess) on top of the firm’s existing books and records so there’s no conversion required. This enables the build out of digital experiences, whether that’s for internal users, bankers, wealth advisors, or their clients.

In order to build a truly 360-degree client view, a firm must be able to aggregate data at the organizational level, the business line level, the platform level and from external sources as well, Benskin insisted.  It often requires a far bit of cajoling and political efforts to encourage different part of the business to cooperate and share data, he observed.

Across the 35 banks and dozens of RIAs that WealthAccess works with, Benskin reported that those that have successfully deployed 360-degree views of their client base have significantly higher growth rates.

These same firms also achieve more success closing cross-selling opportunities, Benskin reported. One bank-affiliated wealth management business executive told him that their assets would be somewhere in the range of 5-10X higher if they could just capture what’s inside their own four walls!

Marketing research has shown that targeting an existing customer has a 60-70% chance of converting, but that chance plummets to just 5-20% for new customers. According to another study, 80% of future profits will come from 20% of existing customers.

Cross-Selling Woes

So why do wealth management firms have so much difficulty selling additional products to existing customers?

One reason is that they have difficulty extracting and consolidating data from their legacy platforms, Benskin noted, can be due to incompatible data formats, non-normalized data and other issues that make it cost prohibitive.  For example, the top financial planning software applications often aggregate a 360-degree view of clients, but there is no easy way to get this data out of the planning tool and into a CRM where it could drive decisions, he said.

At Ezra Group, we have developed a number of methodologies for analyzing integrations between the 300+ advisortech applications that we track.  One is to analyze the depth of an integration between two applications, which can be at one of four levels:

  1. None – there is no integration between them.
  2. Single Sign On – the user only has to logon once and the credentials are sent to the other application. No data is passed between the applications.
  3. One Way Data – data is passed one way only.
  4. Bi-Directional – both applications can pass data.

Sometimes, integrations are not enough and firms decide to hire developers to build exactly what they want. This can provide value added and improve efficiency, if the changes are implemented, deployed and explained. Otherwise, it’s just wasted effort.

Benskin described a bank client in the Midwest that had invested significantly in expanding their version of Salesforce to include dozens of custom fields. But when he checked the database, very few of the fields had any data in them.

While we all agree that a 360-degree view of client data is important, the flexibility to properly utilize that data underpins the entire effort. Wealth management firms must own their data and bring in partners that can enable them to do so with open API that enable manageable data flows between applications.

Data Lakes Solving Customer Problems

Another WealthAccess client is a top 25 regional bank that had a dozen or so different entry points through which customers could access their .com website. That’s a dozen or so different usernames and passwords for their bank clients, business clients, consumer bank client, trust client, broker-dealer client, etc.360 degree client view

The bank deployed a data lake that was able to unify their data and enabled them to develop analytics and create more personalized experiences, Benskin said.  One of these was a destination that small business owner could access and provide actionable data such as their overall balance sheet that can enable them to transact more, and on the wealth side, they gain a valuable line of sight into their finances which is a key requirement for this target market.

Many of these small business owners will one day sell their business which will be a monetization event and all banks likes this type of clients, Benskin said, because they are good borrowers, maintain high balances and are more likely to add wealth management services.

Other bank clients of WealthAccess have been able to leverage endpoints from their APIs to integrate into their own 360-degree views and deliver wealth data into their digital banking experience. This starts to drive cross selling opportunities or opportunities across multiple business lines within the organization. And that all starts with the unified client view.

Dealing with Data Fragmentation

A recent survey, conducted by The Economist found that 34% of financial services executives believe that expanding their customer base is the biggest opportunity from utilizing data-driven insights, which can be blocked by data that is fragmented across numerous silos.

Data fragmentation makes it difficult for business lines to communicate, Benskin noted. This is a challenge since each business line has their own P&L and unit goals, but they all serve the same clients.

Whether they are small business owners or have personal bank accounts or have wealth accounts or a trust, it’s challenging for advisory firms with multiple business lines to deliver unified advice to clients, Benskin observed. But they still must strive to use their data to develop insights that are actionable and can improve clients’ financial lives.

Find a Technology Partner 

The effort gap between customization and configuration is as wide as the Grand Canyon, Benskin noted, which is why most firms should find a technology partner to help deploy and manage data infrastructure.

At Ezra Group, we recommend that enterprise wealth management firms build out the following core functionality to make best use of their data assets:

  • A comprehensive data model that combines key elements related to products, channels, opportunities, and activities.
  • A more customer-centric business model rather than product-centric that integrates transactional, demographic, and behavioral customer data.
  • Process metrics that connect internal and external data sources to the utilization and uses to feed internal systems.
  • Omni-channel capabilities to distribute actionable insights across front, middle, and back office.
  • A single source of truth for all critical client data.

It is imperative that wealth management firms invest in modernizing their data architectures to be able to ingest a wide variety of structured and unstructured data, ranging from portfolio management to CRM to social media sentiments. This will not only require technology updates, but more importantly, an integrated data model will need to be defined by the business to logically combine and connect external market data with internal CRM, risk, and financial data. This kind of transformation requires a few foundational components to be in place before advanced capabilities can be developed.



The Wealth Tech Today blog is published by Craig Iskowitz, founder and CEO of Ezra Group, a boutique consulting firm that caters to banks, broker-dealers, RIA’s, asset managers and the leading vendors in the surrounding #fintech space. He can be reached at craig@ezragroupllc.com