Wealthy require special online care: report

A growing population of Canadian millionaires is not having its online financial needs adequately serviced, according to a new study.

The number of well-off Canadians has more than tripled in the last five years to 315,000, according to “The Canadian Wealth Management Market Report,” released Wednesday by Cap Gemini Ernst & Young Canada (CGE&Y).

The study suggests that this rapidly growing pool of wealthy Canadians (defined as those with $1 million of investable assets) is good news for all financial service organizations, but that only those armed with sophisticated customer relationship management (CRM) tools will benefit.

“The surge in the use of the Internet and the use of mobile devices [demonstrates] the need for banks to serve [wealthy customers] in a more electronic, multi-channel fashion, and there really are very few banks that are leveraging technology to do that for their very high-net worth individuals,” said Stephanie Bowman, vice-president of the CRM practice CGE&Y.

According to the report, one area yet to be developed in Canada is the use of online account consolidation packages that offer a snapshot of an individual’s financial holdings, regardless of where they are held, and are which downloadable into popular financial service and tax preparation software packages, like Quicken or MS Money. These standardized account aggregators, offered by such firms as VerticalOne and Yodlee, are now used in Europe and the United States, but not yet in Canada.

Many affluent individuals who travel or have holdings outside the county are casting envious looks at the financial e-services available south of the border, Bowman said.

In the past, wealthy customers have been served on a very personal basis but there is now a significant percentage of wealthy individuals, especially from entrepreneurial and IT sectors, who are heavy users of technology and are increasingly eager to monitor their complex and widespread holdings online, she added.

“If it’s difficult to get your financial picture in one institution. How much more difficult is it to get it across institutions? We know that many [wealthy customers] use multiple institutions to meet their needs,” Bowman said.

Call centre technology that identifies customer segments and matches them with the right level of service for the customer, as well as “significant investment in the online experience” are some of the initial steps Bowman recommends for improving CRM at Canadian wealth-management firms.

Citing the rule of thumb that “80 per cent of profits come from 20 per cent of customers,” Bowman sees the potential for a handsome return on investments in the “wealth area” of Canadian banking.

“Given that the population of [wealthy Canadians] is estimated to grow three-fold in the next number of years, it’s certainly a population that is worth paying attention to. Based on work that the banks have already done on this area they are finding that the high-net worth individuals that have a high share of wallet with their bank are very, very, very profitable customers — so in that sense it is worth the investment.”

Cap Gemini Ernst & Young Canada is at http://www.ey.com/GLOBAL/gcr.nsf/Canada/Canada_home