Asiaciti Trust: Fiduciaries Must Adapt to Digital Change Now

In case you hadn’t noticed, the world is changing.

The financial services industry is not immune from this change, though many financial services providers act as if they are. Fiduciaries used to doing business the old-fashioned way might actually be more vulnerable to disruption by digital forces. Those that want to survive and thrive in the new normal must take measures to adapt now.

That’s one key piece of advice offered by Ross Belhomme of Asiaciti Trust, a fiduciary serving high-net-worth clients in the Asia-Pacific region.

As managing director of Asiaciti Trust’s Singapore office and a deputy chairman of the Digital Assets SIG Steering Committee of the Society of Trust and Estate Practitioners (STEP), Belhomme has a front-row seat to the digital challenges facing the financial services business. He asks his fellow fiduciaries not only to get serious about digitization but to change how they think of their firms and their relationships with clients in the digital age.

Digital Assets Are Massive Security Risks — And Financial Services Providers Haven’t Caught Up

To the extent that many financial services providers think about digital innovation at all, they think about it in terms of risk management. Every week brings news of another major cyberattack, but it’s actually the smaller breaches that don’t make the news — 100 client records here, 1,000 account numbers there — that increase systemic risk.

These providers are on the right track, says Belhomme. Unfortunately, many haven’t invested in digital security infrastructure beyond what’s required by law where they operate. They risk being disrupted by newcomer fintechs that invest in “military-grade” encryption and other security protocols.

Risk Management Is Only Part of the Picture

Digital innovation supports more than improved risk management practices. It has the power to revolutionize client service, says Belhomme.

As an example, he suggests a client service interface that helps clients help themselves. Hinting that Asiaciti Trust has contemplated such a solution, he envisions a dashboard that enables clients to “avoid the email ping-pong game” and empowers them to “interact with their trustee in their own time.” This solution could also improve data security while increasing transparency, setting up a win-win for advisors and clients.

Keeping Up With Digital Best Practices and Laws

World governments have addressed the digital revolution with a patchwork of new regulations, laws, and advisories that complicate matters for international financial services firms. But the opportunity inherent in international finance is too great for fiduciaries to retreat into their home countries, says Asiaciti Trust’s Belhomme.

“You need to be aware of what the best practice is by keeping up to date and talking to people,” he says, speaking to firms that do business in multiple countries.

Belhomme credits some governments, like the United Kingdom’s, with earnestly seeking input from industry leaders. Elsewhere, industry groups like STEP are lobbying governments for more sensible regulations. That lobbying extends to technology companies and platform providers like Facebook and Google, whose complex and often multi-choice terms of service can complicate matters for estate executors and heirs after the death of an account owner.

“At STEP we are lobbying the FANGs [big tech companies]to make these options clearer and with better defaults,” he says.

Embracing the Role of Digital Trustee 

Ultimately, firms like Asiaciti Trust may play the role of what Belhomme calls “digital trustees.” Clients might nominate a digital trustee to handle their digital and digital finance affairs before and after they die.

These trustees would manage complex and sensitive issues like transferring cryptocurrency or NFT ownership to heirs. This is a process very different from transferring other types of assets and one that requires specialized knowledge which “standard” trustees might not have. And the digital trustee role keeps fiduciaries relevant in a “new normal” where digital asset ownership is the norm and even risk-averse clients embrace new asset classes and investment strategies.

The Financial Services Industry Must Change. Are Fiduciaries Up to the Challenge?

Financial professionals like Belhomme and firms like Asiaciti Trust are clear about the magnitude of the challenge facing the financial services industry. Digitization is forcing complacent firms to rethink how they do business, from the services they offer to their interactions with clients.

Some may not survive. In their place, “digital native” newcomers will come along, offering clients newer and perhaps better services.

Incumbent firms that do thrive amid these changes will be the ones that take the digital challenge seriously and rise to the occasion. Firms led by managers who “get it” and powered by teams energized by the task ahead.

Is yours up to the job?