The Coming Fight for the Loyalty of the Millennial Mass Affluent

A More Holistic and Tech-Enabled Future

According to the Capco leaders, to ensure success in the future, financial institutions must be more than just "trusted advisors selling products." They must also help customers achieve holistic financial wellness through an experience that is personalized, engaging, motivating and reflective of client goals beyond just their finances.

According to Sharma and Norris, these offerings must be wrapped into a seamless one-stop shop, and client experiences must be delivered directly to the customer on digital devices. They even go so far as to suggest the successful digital delivery of services is the "ultimate key" that unlocks access to the mass affluent segment of tomorrow.

In the experience of Capco's experts, the financial services industry's ability to make user-friendly tools is nascent and facing significant challenges. It is hampered, they say, by the inherent difficulty in creating true digital transformation of long-established, legacy systems. Adding to the difficulty is the complexity of products, pricing and operating models — all surrounded by tightening regulations on consumer privacy and data.

Capco's operating premise is that these significant challenges also portend significant opportunities for firms and leaders willing to do things differently. Those firms that get the digital transformation right, Sharma and Norris argue, will win access to a substantial new market segment and enjoy burgeoning customer loyalty. They will also be able to control operating costs and reinvest in their approach.

"Firms that successfully create the right balance of digital tools and face-to-face financial wellness advice will be in prime position to lead the industry as it evolves this decade," Norris concludes. "Only firms that make the required investments in technology, capabilities, partner finding and organizational efficiencies will survive and thrive."

The Growing Need to Partner

Sharma and Norris say this outlook might seem daunting for firms and firm leaders that are not inherently tech-savvy, but the good news is that success for such firms is still very much possible, via the power of partnerships and collaboration.

According to Sharma and Norris, clients in this emerging mass affluent group are used to navigating marketplaces where many service capabilities have simply been commoditized, and they are comfortable with the fact that service providers often both compete and collaborate closely in the delivery of a given product or service.

"This state of affairs gives you a lot of freedom to rethink your operating model and your client services platform," Sharma suggests. "If you need a new capability, you will have the opportunity to buy it, build it or contract a partner. Frankly, in the emerging environment, many smaller entities will have to partner with other groups to deliver expected capabilities, and that is OK."

In fact, the Capco experts say, many firms, regardless of their size, will probably be better off utilizing third-party technology solutions to solve key client service problems. The alternative is to try to compete with — or more accurately, catch up to — digitally empowered organizations that are better skilled and better resourced.

"Our general suggestion is that, if a service deliverable is not a key part of your firm's unique and well-understood value proposition for your clients, you are probably better off outsourcing it," Norris says. "In many cases, your clients won't even know, or care, that a partnership is happening."

(Illustration by Carlos Zamora)