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Seamless and secure: digitalising your family office

Family Office
Family office

Seamless and secure: digitalising your family office

Jun 7, 2021

The pandemic has sped up the use of digital tools for working and communicating, but information security must remain at the forefront when family offices choose to use new technologies.

The digital transformation trend that was already underway has been greatly accelerated by the events of 2020. Technologies such as video conferencing, AI and automation have moved into the mainstream, and in the coming years, advancements including the expanded rollout of 5G will unleash further changes. 

Family offices have been able to adapt quickly, and it is important for them to keep pace with new developments if they are to succeed in their goals of growing and preserving wealth and passing it on to future generations. Many family offices are well placed to benefit from digital solutions to meet the multiple and complex needs of wealthy families.

However, it is important for any family office embarking on a digital transformation project or introducing new technology tools to assess costs, evaluate compatability with existing software and the geographic location of the family office, and ensure their information systems are protected against cybersecurity threats. 

Embracing technology for operational effectiveness

“We see a growing trend of institutional family offices quickly embracing new technologies,” says Aik-Ping Ng, Co-Head of Family Office Advisory Asia Pacific, Wealth Planning and Advisory at HSBC Global Private Banking. 


In terms of strengthening their operational processes, governance mechanisms and IT infrastructure, we see increasing adoption of new technology to further bulletproof their nerve centre.

The potential benefits of incorporating new technologies fall into two main categories. On a day-to-day basis, family offices will be able to follow more efficient business practices in areas such as accounting and bookkeeping, document control, planning and reporting. 

“Family office employees will be able to communicate much more seamlessly, share files, collaborate on projects and so on,” says Ng. Some family offices will also benefit from using technologies in areas such as investment or risk management. “For example, if they trade on a regular basis, they may decide to acquire a Bloomberg terminal to carry out trades, or properly manage risk through reporting and data analytics solutions available in the market.” 

At the same time, family members will also benefit from establishing communication mechanisms that help them share information, maintain oversight of their business, access data in real time and make faster business decisions. Digital communication platforms are especially crucial for multi-generational, multi-jurisdictional families where members reside in different regions or around the world. Family offices can play a key role in keeping them connected and involved with discussions about legacies, values and goals. 

“For example, I’ve seen external service providers providing technology solutions to help clients streamline family, board and shareholder decisions through centralised platforms. Family members can sign documents such as board resolutions, run family meetings online and share sensitive financial and legal documents through secured systems,” says Ng. “This could be very helpful for more sophisticated families and family businesses, and enhance family cohesion in today’s world, where face-to-face meetings are more challenging.”

Putting proper frameworks in place

The use of digital tools to tie together all aspects of a family’s business and family affairs is not new, but for many family offices, the pandemic has revealed the benefit of platforms that allow work to continue efficiently, smoothly and securely.

“Covid-19 has been a ‘black swan’ event, and we are seeing a lot of family offices looking to fortify their business and investment operations,” says Ng. “They are putting a stronger emphasis on developing proper governance frameworks, as well as running diagnostic tests to isolate weak or underdeveloped systems and protocols, so that they can reinforce existing processes and install more effective systems.”

One family, for example, sought support in setting up new governance mechanisms as part of an overall succession plan. They required guidance in determining the policy of granting different levels of information rights for family members seeking to access the family office’s self-developed IT system.

Strengthening systems to ensure continuity

Other family offices have formally adopted business continuity plans. Even where a plan already exists, the technological leaps of the past year will have exposed limitations or vulnerabilities. Family offices are therefore focusing on preventing cyberattacks and increasing security measures, ensuring they have the right tools in place for when an incident occurs.

“Family offices may be targeted by hackers and in many cases do not have in-house cybersecurity teams in place, rendering them vulnerable to attack,” says Carly Doshi, Head of Wealth Planning & Advisory Americas at HSBC Global Private Banking. “On top of common spam messages, cyber criminals attacking family offices also use AI-based techniques and deep fakes designed to trick family office staff.” 

With many family office professionals working from home over the past year, there is increased awareness that confidential communications over video conferencing or instant messaging are at risk of eavesdropping or interception. While the remote working environment increases the risk in some ways, the good news is that many family offices are prioritising security more than ever and taking steps to make themselves impenetrable to potential attacks.

Build or buy? Finding the right solution 

Alongside security considerations, one of the most fundamental decisions that a family office faces is whether it should build or buy.

“Any investment in new technology will require a fundamental cost-benefit analysis, and that will ultimately involve a conclusion about whether to invest in building a system or to buy systems off the shelf,” says Ng. “Every family office is different, and the system that works for family office A may not be very valuable for family office B.”

While third-party software providers often construct their systems in a way that allows them to add new modules or features to meet the requirements of new clients, sizeable family offices in particular may conclude that it is more attractive to build their own platforms.

Either way, cybersecurity best practices need to be part of the specifications from the outset.

“For a family office engaging new potential service providers, whether that be an accounting firm or a technology company, the inquiry process must include a review of the provider’s security policies and procedures,” says Doshi. “Any system is only as secure as its weakest link.”

HSBC Global Private Banking can work with family offices to create a strategic plan to keep pace with the digital revolution, address the various types of cyber threats, and continually review and update their operations as new technologies emerge. For more information, contact us or your Relationship Manager.


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