We Just Witnessed a Decade’s Worth of Digital Transformation in Less Than 10 Months.

Where Do We Go from Here?

Five trends we expect to drive financial services in 2021

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January 15, 2021

By Neesha Hathi, Executive Vice President and Chief Digital Officer, Charles Schwab

The beginning of the year is always a time for reflection. This year it’s particularly important we take a moment to consider both what we’ve just been through and where we’re going.

I read somewhere that historians of the future will have to choose what month of 2020 they want to specialize in. While the year was filled with unprecedented challenges resulting from the Covid-19 pandemic, we also saw remarkable stories of adaptation, growth and advancement. One of those stories occurred in the area of digital transformation, where I believe we saw a decade’s worth of progress in less than 10 months.

Neesha quote

"Schwab has played a significant role in the digital acceleration we’re seeing across the financial services industry. I’m enormously proud of how far we’ve come, not to mention the influence we’ve had on our industry to focus more on digital-first solutions. Most of all, though, I’m proud of the difference our work is making in the lives of our clients."

Neesha Hathi, Executive Vice President and Chief Digital Officer

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So where do we go from here?

As I look ahead, I see five important trends driving digital financial services for 2021. These reflect our changing environment, investors’ evolving needs, and the ways technology can serve those needs. It’s all about people and technology. 

1. The Financial Wellness Imperative

A silver lining of the pandemic is that it has led many people to reconsider what wellness means. We’ve heard from many clients who’ve come to realize that wellness isn’t limited just to physical and emotional health, but includes financial health too. Right now, only 28 percent of Americans have a written financial plan, and we think that’s going to change. We’re seeing that investors not only want to create life goals, like college plans or retirement, but that they also want to be able to track their progress toward these goals.

Like the way digital technology has changed fitness coaching, “finance coaching” is changing too. Investors can get personal guidance for formulating a financial plan digitally, through an expert, or both. We think investors will lean away from the low-engagement, once-a-year planning and toward closer, ongoing guidance and more “bite-sized” advice. One study predicts that by 2030 half of all investment clients will actively pursue and track their goals at that level – and Schwab technology is well-positioned to be up to the task to help investors.

2. Changing Demographics, Need for Diverse Skills

Schwab was built on the idea that anyone – people of all ages and in all stages of life – can take control of their financial futures and become an investor. It does not matter who you are. Yet, this year, we’ve seen demographics change substantially. More specifically, we’re seeing an increase in younger, digital-native investors entering the markets. While this group favors primarily digital engagement, it’s a mistake to think that replaces the need for personal interaction and human support. In fact, we’re finding that human connection remains as important as ever, but it sometimes comes in different forms. For example, interaction can occur on-screen rather than the traditional face-to-face meeting in an office.

It’s not just younger generations who are coming online as investors. Previously underrepresented groups are making up a larger share of investor demographics as well. Women are increasingly in the driver’s seat when it comes to financial decisions. McKinsey projects that women will control more than $30 trillion in assets in 2030, and in fact they already control $10 trillion – so we’ll likely see a three-fold increase in the next 10 years.

Delivering to all the diverse clients we serve will require a diverse team with a wide range of viewpoints, experiences and skills. When Schwab began back in the 1970’s, it was founded on the belief that the investment industry needed to be more inclusive. That is happening, and we’ll continue to recruit to support this goal, not only from various demographic groups who reflect our client base, but also from disciplines outside the financial industry that will make us more agile and add depth to our perspective so we can serve all clients.

3. Deeply Personalized Investing

Personalization of investment portfolios has become the norm. Investors expect a plan that’s specifically tailored to their individual needs and relevant to the current investment climate. Investors want to experience their financial life in a way that’s customized to them, just as they experience in other parts of their lives – from Netflix autogenerated recommendations to online grocery shopping.

But now, personalization is becoming deeper and more impactful, so that it reflects not only financial goals, but is aligned with issues people care about, whether it’s the environment, social responsibility or gender equality. In one study, 87 percent of consumers said they would purchase a product from a company because that company advocated for an issue they cared about. Though this is based on consumers more broadly, to me, this trend will also be reflected in people’s views about financial services. This means that providing options and products that allow investors to customize their portfolios to align with their values, beliefs and circumstances will be increasingly imperative.

4. Data as Currency for Trust and Growth

Attitudes toward personal data are evolving. Data is the fuel that powers personalized digital experiences and brings technology to life. Consumers understand that sharing their personal data can lead to better outcomes, but they also expect to have one hand on the wheel. They want to know who is accessing their data and how their data is being used. We’ve spent a lot of time thinking about how we balance that.

Our path at Schwab combines a commitment to security and transparency and to delivering value that’s based on the data entrusted to us. We have an immense responsibility and opportunity to enable deep understanding of our clients and use the rich insights to anticipate needs and solve problems, but we do not take that lightly. We are steadfast in our commitment to protect client data, while we also maintain security and keep our clients’ trust.

5. Industry Consolidation and Competition

Competitive pressures are continuing to force players in financial markets to consolidate or transform. The lines between industries are increasingly blurry, not only among brokerage, asset management, banking, and wealth management, but also among financial institutions in general and new players like big tech companies and fintech startups.

New entrants have democratized access to information and new ideas, just as our technology has allowed Schwab to democratize access to investing and to reach people on their own terms. Sometimes this means direct interaction with clients through our people or our technology, and sometimes it means strategic partnerships, integrations or acquisitions.

This increasing competition does not deter us. Schwab is well-positioned for this due to our client focused, transparent business model and to our tradition of disruption from within. The competitive landscape will continue to ensure that we are constantly upping our game for our clients.

It’s likely that 2021 will be another year of transition, change and uncertainty. It will also be another year of progress, growth and improvement. Yet among all the change, one thing remains constant: Schwab’s commitment to see the world through our clients’ eyes and to do everything we can to transform their tomorrow for the better.



All corporate names are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security.

Investing involves risk, including loss of principal.