Over its 25 years operating in Latin America, banking technology company Temenos has seen how digital transformation has steadily taken hold in the wealth management industry. Looking ahead, the firm expects this trend to continue deepening, with the affluent market as a particularly fertile space for these types of solutions.
For the company’s regional representative, we are currently only beginning to see the start of the wave of technological transformation in the financial industry. “Today we are starting to see the first benefits extending to other markets in areas such as financial education and digital channels. That is the piece that enables users of these types of products to be more inclined or more predisposed to adopt tools, even artificial intelligence, for the investment side,” said Alejandro Masseroni, Regional Sales Leader at Temenos, in an interview with Funds Society.
Looking ahead, one area they are watching closely is the “affluent” market, a more mass segment that wealth management firms have been opening up to, supported by technology. “In the affluent market is where we see the greatest potential, due to volume,” he explains.
The executive describes a “snowball effect” in the adoption of technology in the sector. “Users who began using these tools for their day-to-day operations, for simpler products, are now the ones trusting these channels to invest or making their first investments through them,” he notes.
The Potential of the Affluent Market
For Masseroni, the appeal of technologies such as artificial intelligence lies in supporting investment advice—not replacing the executive or financial advisor, but providing information, responding to investors’ interests, and understanding their needs. The idea, he says, is for clients to use it as a kind of “copilot.”
“In the affluent market, there is more to be done in empowering the advisor,” says the Temenos representative. Given the mass nature of the segment, technological tools have the potential to amplify the actions of a financial advisor. “This is where there will be a more drastic change,” he adds, in terms of creating new tools and enhancing advisors.
In that sense, Masseroni highlights that greater access to investment strategies for smaller portfolios has been driving the “significant” growth seen in the affluent segment. “What matters is understanding the new wave of investors that exists thanks to these digital channels and these new ways of investing,” he notes.
Moving up the capital ladder, for high-net-worth and ultra-high-net-worth portfolios, Temenos’ view is that a hybrid service model will emerge, maintaining some features of traditional financial advice while incorporating the efficiency of technological tools. This includes operational aspects as well as specialized information.
Dynamics in Latin America
In line with this trend, the technology firm sees an attractive business opportunity in Latin America, where it has been present for 25 years. It currently operates in Mexico, Brazil, Argentina, Chile, Peru, Bolivia, Colombia, and key markets in Central America and the Caribbean.
Regarding where they see the greatest potential for growth, Masseroni emphasizes that “the greatest potential is where there is the lowest penetration of the financial industry among the population.” For example, he points to Mexico, which has a broad offering but is concentrated in certain client segments, and Brazil, where investment platforms have not reached the same level of mass adoption as the transactional Pix system.
To achieve this, he stresses, it is essential to build the foundations and provide education, which foster trust when using platforms. For people to begin investing through these channels, their use must first be established in basic transactions and in the consumption of simpler financial products, such as bank deposits.
By contrast, the markets where they see greater penetration of technological tools in wealth management are Chile and some markets in the Caribbean and Central America, highlighting Panama, the Dominican Republic, Bermuda, and the Bahamas, among others. In these markets, Temenos has observed a high level of digital transformation activity.
This momentum has been led by services for high-net-worth and ultra-high-net-worth clients. Today, Masseroni adds, “they are looking to reach lower-wealth segments to make it more mass-market.”
“Part of the region’s potential is that there is also significant investment,” where institutions are allocating resources to transform themselves, he concludes.
