Through the creation of a Chief Digital Officer role, Noah Holdings embarks on an ambitious digital transformation strategy...
“The wealth management space is a pretty niche segment of the financial industry. Couple that with digital, which right now is one of the more popular areas of IT and technology, and what I’m doing with the company is going deeper and deeper into the cross-section between financial institutions, and technology,” says Ronald Fung, Chief Digital Officer at Noah Holdings.
Noah is currently undergoing a digital transformation, implementing new technology and innovation to better understand and ultimately better serve its customers.
Fung was brought into Noah in 2017 to oversee this transformational journey, bringing with him significant experience working in the financial technology space. It is this experience that provided Fung with a greater understanding of how technology and the role of digital has grown significantly over the last decade.
“In the past, the role of IT has always been more of a back office one, with a focus on process automation and making things cheaper, faster and more efficient,” he says. “Over the last 10 years, technology has actually moved right to the point in which it now reaches out to customers directly.
“Nowadays in the financial sector, you cannot split between whether technology is a supporting tool or the driver of the business itself.”
Historically, wealth management has been a predominantly very human, face to face-oriented industry. That human interaction has always come first, with data collection and technology coming second.
Fung’s role as Chief Digital Officer provides him with two core objectives for Noah.
The first objective, leveraging big data
“It’s about looking to better understand our customers and our clients through data, learning about how we work with them and becoming better each and every time,” he says.
The second objective is a little broader, tasked with bringing in and developing innovative technologies into the wealth management space.
“Innovative technology in the past has never really been the core focus, because applying the so-called ‘fancy gadgets’ is usually something that wasn’t really seen in the wealth management space,” Fung says. “But this is something that is happening more and more across the financial industry.”
As technology and the role of IT continues to expand beyond the traditional mindset of it being more of a supporting tool, more and more companies are beginning to feel a sense of pressure to implement certain technologies in order to keep up with competitors.
This, Fung believes, is a fatal flaw as it is important to understand exactly what technology can be applied and how it can actually better drive growth.
“At this point there are certain technologies that are just not applicable to the wealth management space, so it’s very important that I understand this and have a judgement of when the best time is to bring it into the business,” he says.
“In the financial industry, everything is number driven and so you have to be able to justify technology from a business case.”
Fung avoids implementing technology for technology’s sake by looking at it from a clear perspective – the criticality.
When looking at the criticality of technology, Fung accepts that some technology is 100% critical and that not implementing it now will set the company far behind any competitors in the near future.
“You wouldn’t have a ticket to play in this game anymore,” he says.
One such example of critical technology is data and the leveraging of client information. Due to the very human nature of wealth management, this creates relationship managers that have a personal and clear understanding of clients and their needs. This presents a situation where one could argue that there is no need for technology when the process is smoothly in place.
“The problem then becomes a matter of “you don’t know what you don’t know”, someone from the blind spot may be able to utilise big data or AI and creating a much clearer understanding of your clients,” says Fung. “Because they have such a deep understanding of your client, then they could completely take over your business and put you out of the game.”
As technology has continued to transform the industry, dictating the direction and strategic thinking or organisations such as Noah Holdings, how has the customer changed with it? With more and more technology advancements, providing more power to the customer, how has this changed the way in which Noah must respond to customers?
“Clients have been exposed to more and more technology in recent years and so they are now demanding more technology touch points and more convenient and direct interaction with us,” says Fung.
“In fact, what this has done is enable the conversation surrounding technology to happen more frequently and to be more informed. Now, when we discuss technology, the expectation is much more realistic – we understand what technology can and cannot do in terms of supporting clients. As those clients have changed, it’s definitely helped educate us as a business much quicker.”
Now in the second year of this digital strategy, Fung can already begin to look back on key successes achieved along the way. One of the biggest changes has been one of its strategy focus, in which Noah Holdings places greater emphasis on leveraging technology in delivering client impact. One such example is the role of Chief Digital Officer itself.
“We may be the only one in the industry to have a Chief Digital Officer,” he says. “and the key here is how Noah enables this role to introduce innovation like robo advisory and big data.”
In just one short year, Fung has already seen a huge shift in the business, looking to technology as a means of enabling far greater service and understanding for its clients. As he looks to the future growth of the company, he admits that there is still a long way to go.
“In terms of how we can apply these innovative technologies and how we leverage data to make our service better, make our product better and to have an ecosystem in making all things smooth for all parties, I’d say we are still at a very, very early stage,” he says.
“There is so much we can do as a business, for the business and, ultimately, for our clients.”