Improving IT performance in wealth management

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For most wealth managers, measured improvements have been made in channeling IT expenditure toward change activities, with increasing amounts of IT spend aimed at developing new functionality. Yet, despite sizeable outlays, wealth managers are not always left with the sense that their IT is fully in tune with the most important business priorities.

Making IT spend more effective

Given the current levels of intense competition and margin contraction, wealth managers are trying to stretch capital and operating budgets and do more with less.

There is no straightline relationship between IT spend and business returns. High IT expenditure does not always equate to superior performance.

As part of our effort to understand the return on IT investments for wealth managers, we studied the relationship between financial performance and IT spend.* This analysis helped us identify the players that spend carefully on IT and successfully apply these investments to capture business value.

Three skills to master

Our experience shows that players who are best at ensuring their everyday IT spending are efficient, and their IT investments target the highest-impact projects and master three skills:

Strategic alignment

Wealth managers who achieve superior returns for lower IT expenditures are much better at aligning IT spending with the organization’s strategic priorities. They develop their IT strategies in close cooperation with the business by using formal governance processes and engaging their broader stakeholders and influencers to focus on the value creation levers that IT can shape and change.

Controlled demand management

Leading wealth managers endorse highly controlled demand-management processes to govern project selection and funding. Their goal is to realize the value of IT investments by establishing controls on incoming demand, thereby effectively coordinating resources and providing transparency on performance over time. To reduce the number of non-critical projects entering the pipeline, leading players require that each incoming change initiative (e.g., for application development) articulates the expected return on investment as part of the approval application. This ensures that resource consumption and returns are made transparent, and that management has visibility over IT spending.

Forceful complexity management

Leading wealth managers are very disciplined when it comes to cutting complexity across multiple layers. They do this by applying strong governance frameworks, implementing authority boards for the review and design of architecture, and streamlining the application and infrastructure environments. By shoring up discipline and governance around key IT-complexity drivers, wealth managers can reduce operational costs and improve quality and the time to market of solution delivery.

* Digital disruption and the game-changing role of technology in global wealth management, EY, 2015, www.ey.com/WealthITsurvey.

The complete article was written by:

  • Dr. Robert Rümmler
    Senior Manager, FSO, EY, Switzerland

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