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Many wealth management firms have been offering cash management and transactional banking capabilities to retail clients for decades through third parties or their own bank affiliates. Revenue from these banking entities has grown strongly over the years, and now nonbanks are eager to acquire banking capabilities of their own. While offering banking solutions to wealth management clients is not new, the importance of these solutions to wealth management firms of all types for acquiring, deepening, and retaining client relationships has grown. A new Aite Group report, Banking in Wealth Management: Cash Is Still King, examines the trends driving new banking and cash management offers from traditional and challenger wealth management firms in the United States over the last few years.
“Digital challengers to the wealth management industry acquired billions through high-yield savings accounts in 2019,” states Sophie Schmitt, senior analyst at Aite Group. “While rates may no longer be the selling point today, personal finance automation and holistic advice are, and it starts with the bank account. Traditional firms are playing catch-up and adding features and products that appeal to the high-net-worth. The competition to offer banking services will intensify further, as the traditional technical and regulatory barriers to entry are lifting,” she explains.
This report provides a review of banking and payments technology providers that have enabled nonbank wealth management firms to deploy innovative banking services in record time. It is based on approximately 20 interviews conducted throughout 2020 with traditional and challenger wealth management firms, and the technology and payments providers that help them deliver banking solutions. It also includes results from a Q2 2020 survey of 16,452 U.S. consumers ages 18 and older.
