COVID-19, cryptocurrencies, and changing attitudes to insurance and investing are creating big changes in the wealth management sector across the globe.
Customers now expect similar ecommerce Amazon and Netflix-like experiences when it comes to their banking services and apps. Younger, tech-savvy investors are also looking at new asset classes, like cryptocurrencies and non-fungible tokens (NFTs), as well as green investments.
As a result, big banks have to quickly adapt to stay competitive against the smaller, more agile fintechs and startups.
Companies that can adapt to changing customer expectations by providing digital offerings that offer a great ecommerce-like digital experience are likely to be the most successful.
What is wealth management?
Wealth management is a broad term that refers to how different parts of a person’s financial life are managed. It’s usually carried out by financial advisors who take a holistic look at all aspects of a person’s finances, including assets, income, estate planning, retirement, insurance, and more.
According to the Reserve Bank of Australia, the term wealth management refers to any form of fund management and financial services. This can be superannuation (pensions), managed funds, and insurance products.
Wealth management used to be solely managed by fund managers, but in the last 25 years, banks have taken on more and more of these responsibilities as they saw an opportunity to cross-sell to their existing customers.
ING Australia has been at the forefront of leveraging these opportunities to provide additional financial management services for customers. Operating since 1994, ING Australia offers retail transactional banking products as well as superannuation, and multiple insurance options.
I spoke with Crystal Hanna, Tribe Lead Wealth (Superannuation, Investments and Insurance) at ING Australia, to learn more about how wealth management is adapting to changing values and more digital-savvy customers.
Nat Chrzanowska: Could you explain what your role at ING is like?
Crystal Hanna: I'm currently the Tribe Lead of Wealth which is quite a broad remit. We offer general insurance, (which is known as P&C - property & casualty in Europe) and health and pet insurance. I also look after superannuation for our business.
You previously worked as Head of Insurance for ING Germany, what are the biggest differences between the Australian and German markets within wealth management?
The biggest is the cultural difference.
In Australia, we're more debt producers. We are more likely to put ourselves in larger volumes of debt to purchase homes. Culturally, we're not savers and are more willing to give our data on platforms digitally.
German customers are more likely to read through the terms and conditions. They're more cautious with what they will purchase and will generally do more research. This means that the tools you offer and communication you have with German customers to help them differ. Their likelihood to give information digitally is also lower.
However, the actual products that customers look for are very similar in both markets because the core needs don't change. People want to ensure that their houses, cars, and lives are protected and that they get a good quality product at the lowest possible price.
What are the biggest challenges in the wealth management sector that you have observed within the last two to five years?
In Australia, we have a huge wave of regulatory changes coming through. It's balancing that implementation of regulatory reform without losing touch with customers because ultimately, the reform is to help the customer.
The second challenge is digitization. Different areas of wealth are at different levels of digitization. For example, investments where customers can use real-time trading and routine insurance with online applications that a customer can purchase in real-time, but when they make claims, these are still paper-based and harder to track.
The final challenge for us is just managing customer expectations. For example, with super investments, people want solid returns. They want it at a low cost. They want it done ethically, and sustainability is becoming more and more important.
Customers almost expect Amazon or Netflix-type ecommerce experiences when it comes to financial services.
They want to addon services and pick and choose from investment portfolios or insurance policies.
Some of that is possible. Some of it perhaps is a bit of a stretch based on our local laws, but those expectations are driven by these big ecommerce retailers. It’s definitely changing the way we need to do business.
There is a lot of disruption in the market with smaller, agile companies opening wealth management services up to more people. How is the growing trend of democratization of wealth management affecting ING?
We’re seeing the exact same thing in Australia. Ten years ago, people thought about investing as - let's be honest - old, white, wealthy men moving money.
What we're seeing now is this shift to micro-investment, particularly in Australia, where customers want to invest but sometimes don't know how, and they lack that initial confidence to dip their toe in.
The big banks are trying to modify. Commonwealth Bank, which is one of the biggest banks here in Australia, has launched a trading app called CommSec Pocket.
What does it mean for us? We're deeply interested in what's happening in the market and because we don't have any legacy in this space, we're really trying to work out how we’d like to play in this marketplace.
What are the biggest strengths of ING in the wealth management industry?
We have different strengths. Overall, we have quite a powerful brand. We have been the most trusted bank here in Australia for five or six years running.
We built trust back into banking. When customers see our brand, they know that we will do the right thing for them.
In insurance, we have an extremely digital mobile-first offering that customers can purchase online. It's embedded within our online banking, so they can see it within their whole portfolio.
Our super product is designed for a slightly different demographic with a very large investment option selection. The demographic is older and a little bit further ahead in investment knowledge and so they want that breadth of investment choice.
Are existing customers interested in investing?
They are definitely more aware. We're seeing more and more customers ask us, “do we offer these particular choice sets?”
Customers want the choice. They want to check performance returns and make a choice. That's where I think Europe is far ahead of Australia, because the importance of sustainability to the community seems to be more significant there.
Do customers typically stick to insurance products within your bank or find different deals across different competitors?
It's a bit of a mixed bag.
We have digitally savvy customers who are deal-seekers and will buy from you this year, but next year they'll go back to a comparison platform. Whether they want to stay with you or not, we're very good at retaining those customers because we offer quite good value for money.
Around 60% to 65% of our base in Australia are existing ING customers who are taking out products because they want their insurance and financial services under one umbrella.
So, they’ll take out home, contents, car, and pet insurance.
We're also good at getting new customers as well, which is unusual. Generally, most of a bank’s insurance customers are cross-sold from their existing bank account rather than brand new customers.
What's your take on NFTs and cryptocurrencies? Do you plan to introduce those in the private market?
Cryptocurrencies are a hot topic globally. We're a highly regulated market and because cryptocurrency is not regulated in Australia, it comes with a significant exposure risk.
Right now, we are watching from the sidelines to understand what will happen, whether our regulators will look to regulate it and how that will work within the banking infrastructure.
What are the biggest missions for ING this year within wealth management?
There are a few things that we're doing. The first is that we are investigating new products that could potentially fit well with our business.
The second is we're also looking at our superannuation business. We offer a great product at a very good price. It's won different awards and we are evaluating whether in ten years this the product will still be the right one.
In insurance, we're trying to ensure that the operations are embedded in every part of our organization.
ING Australia has launched five products in the last three years. We've been on this rapid journey of building out all these products for our customers and the team have done a good job. But now we need to make sure that they have end-to-end functionality, like the ability to submit online claims through our app.
Australia has been hit recently with floods and bush fires, so we're trying to make sure that we're doing the right things for customers and their claims.