Mid-market wealth managers have the mindset and flexibility to rapidly transform their culture and client relationships, yet they often lack the assets to create major disruptions.

The wealth management industry is looking to its largest players for waves of digital disruption, transforming relationships with clients and stewardship of their assets.

Each continent boasts its own regional champions, with several able to instigate cross-border innovation. JP Morgan and Merill/Bank of America dominate US rankings. Itaú retains its digital crown in Latin America. BNP Paribas and UBS are in the vanguard of Europe’s tech high-steppers. In Asia, DBS and Bank of Singapore are doing much of the running, although Chinese banks are fast catching up.

Yet, this headline overview does not tell the full story, of mid-market banks building products and apps, deploying concepts and creation skills that they are seldom given credit for.

“Large banks certainly have resources and capacity to explore a wide range of digital trends,” believes Sandra Daub, board member at Noumena Digital and guest lecturer at the University of Lucerne in Switzerland.

“As often with innovation, not every idea turns into a success, but with their scale, bigger players have higher probability of striking ‘digital gold’.”

Mid-size banks across Europe, on the other hand, face “innovation deadlock”, squeezed between twin pressures of rising costs and increasingly complex legal requirements.

Left with barely any semblance of the “open, forward-thinking” mindset necessary for real innovation, Ms Daub sees banks cutting transformation programmes during cost-saving initiatives.
Indeed, most larger players focus innovation expenditure on low-hanging fruits of communication and marketing. Additionally, she sees increasing adoption of tools — such as GenAI applications — that support relationship managers by streamlining internal tasks like information retrieval from CRM or other systems.

“These types of innovations are typically lower risk, quicker to implement, and easier to integrate into existing structures,” says Ms Daub in her assessment of larger firms looking for quick fixes and flagship announcements.

“In contrast, groundbreaking innovation in core areas such as portfolio management, digital assets, or advanced data analytics tends to progress more slowly,” she says.

Innovation labs

While many banks do explore these fields — often through innovation labs or proof-of-concept initiatives — few projects make it to production, for reasons both practical and cultural.

“Wealth management, in particular, is a highly sensitive domain where reliability and performance are paramount,” says Ms Daub. “For instance, banks are understandably cautious about introducing GenAI-driven recommendations into portfolio management, given potential risks and lack of tolerance for errors in this context.”

Moreover, new areas such as digital assets face systemic challenges, according to PWM’s judging panel for the Wealth Tech Awards 2025. Cultural transformation of a broader ecosystem, combined with need for regulatory clarity, takes time, leaving few brave souls to take the plunge.

While banks are not lacking ambition in transformative areas, the pace of change is shaped by risk, regulation, and need for alignment of ecosystems, they believe.

When it comes to collection and analysis of data, scale can be a clear plus point. “Large firms have the advantage that they are sitting on a mountain of in-house data,” says Alois Pirker, Boston, US-based CEO of the Pirker Partners strategic consultancy. “It is no accident that OpenAI have struck close relationships with firms like Morgan Stanley, as it can test its platform at scale at those firms.”

Democratic digitalisation

That said, he expects future innovation to come from all market segments. “The playing field of innovation is more levelled than it has ever been,” he suggests. “This is largely because innovations in recent decades were in the public domain and in the hands of consumers well before financial institutions adopted them.”

He cites AI as one recent example, “where the whole world is playing with ChatGPT long before businesses have figured out how to best leverage it”.

The broad availability of these technologies also makes it possible for startups and small financial institutions to leverage latest innovations, with “huge budgets no longer a prerequisite”.

There is certainly another school of thought that sees the biggest banks as dysfunctional, “organised with competing silos and not cross functional groups, let alone involving clients in their day to day business,” according to April Rudin, founder of the Rudin Group marketing consultancy in New York.

Furthermore, an inherent reluctance to introduce digital processes is costing wealth managers in assets, profits and customer numbers, she says. “Most firms still think they can use referrals to build books of business one by one, when digital marketing returns multiples.”

Bankers are often unable or reluctant to transfer technologies from one sphere of industry to another. “Innovation is about finding new ways to solve problems. It requires open mindedness and creativity,” says Sharmil Patwa, founder of the Opus Una consultancy in London, previously with Barclays.

“I think it is hard to find because technologists in banking in general are not very good at looking at how problems in other industries, that also exist in banking, are solved. Folks in banking think that solutions can only be found in our own ecosystem. I don’t think that is actually the case.”

Leading players have also struggled with the economics of innovation. “Digital client/adviser engagement has proven to be a money pit for most firms we work with,” says Doug Fritz, co-founder of US digital consultancy F2Strategy. “It turns out that most clients would rather have the portfolio complexities discussed with a human. Client web and mobile adoption is in the low double digits.”

Lack of scale should never be a problem, say our experts. “In banking, technology innovation is hardly ever a scale game. Large banks often struggle to innovate due to legacy systems, a lack of entrepreneurial mindset among managers, and challenges in attracting top IT talent,” says Sigrid Unseld, founder of Scilla Consulting in Zurich. Digital innovations, she believes, are typically driven by startups and newcomers unburdened by such constraints.

More innovation, believe some commentators, is coming from mid-market banks and even some of the smaller ‘Davids’ rather than the Goliaths.

Newer players including Interactive Brokers, Wise, and Revolut have stepped into the fray, offering more advanced services. Free from the burdens of outdated infrastructure, these companies “can focus on delivering enhanced functionalities and seamless customer experiences”, says Ms Unseld.

 

Reinvention tension

Too many so-called current “transformation” projects involve digitalising previously automated processes, rather than real innovation. “Automating 20^th century processes is not an innovation strategy,” stresses author and futurist Amelia Kallman, calling for “reinvention” of business models, rather than tinkering around the edges.

“The future of finance won’t be built on faster apps or sleeker dashboards — it will be built on autonomous decision engines, trustless transactions, and AI agents that can act, negotiate, and optimise in real time without human input,” says Ms Kallman.

The type of private bank she describes for the middle reaches of the 21^st century is very different from the models which most global players are developing today. “In the future, the most valuable financial institution may not be a bank, but an AI-native start-up with no branches, no legacy systems and no human advisers,” she says.

Over the last 10 years, boutique players have been rising through the ranks, spurred by changing cultures and digital ambitions. Among this cohort are: LGT, the “family banker” for Liechtenstein’s Royal Family, successfully raising assets from wealthy clans across Asia to invest in sustainable assets; Poland’s mBank, Turkey’s Akbank and the traditionally branded Van Lanschot Kempen of the Benelux region, increasingly mentioned among digital innovators.

“There is a hope and it is also a reality,” says Sebastian Dovey, an entrepreneur and independent wealth management consultant. “These players are very aware that to have an edge in the market relative to larger competitors, they will need to be innovative. They have been knocking on the door of broader scale recognition for several years now.”

But these smaller players may still have to wait two to three years, before their innovations are widely recognised and adopted by the industry. “Technology innovation is not the preserve of the big banks. Indeed, so much innovation comes from the smaller entities that are vying for market share,” says Mr Dovey.

What is noteworthy about the larger banks is the vast volume of client assets, against which they deploy AI innovation. “They have something which all others seek, and that is volume of clients,” he says. “Their scale offers greater insight into the impact [of AI innovation].”

Banks with the biggest budgets still hold the lion’s share of client assets and are able to introduce significant digital features. “Truly transformative innovation will come from the larger players or from organisations that are able to acquire the funding — from private or public sources — to scale,” says Cory McCruden, managing director for wealth and asset management at consultancy Ernst & Young in New York. “I think resource constraints will make it challenging for innovation originating in [the mid-market] segment to have a truly disruptive impact at an industry level.”

Source: PWM