In another transformative year for the family office software industry — and for the entire tech industry — artificial intelligence is unquestionably the current driving force for innovation and disruption. Thanks to the accessibility of applications like OpenAI’s ChatGPT, unveiled almost exactly one year ago, anyone with an internet-connected device has been able to explore the powerful capabilities that generative AI has unleashed. 
While many tech companies were already busy integrating AI, the ChatGPT revelation immediately compelled those laggards to find ways to integrate its capabilities, not just to enhance their existing offerings but also to expand on them through new AI-driven functionality.
In the most recent Simple report on the family office software and technology sector, these and other trends are tracked using both qualitative and quantitative research to offer a practical and accessible snapshot of the current state of the industry. Through extensive online surveys and in-depth conversations with family offices and leading technology service providers, the research highlights five key areas of development making the most impact.
Technology integration and professionalization
Family offices have been slower to adopt technology, with many continuing to use legacy tools for wealth management and operations. While seemingly obvious and very much in line with digital transformation across industries, 2023 was the year that almost unanimously saw family offices either implement new technology or commit to finding technology to meet its needs amid an industrywide desire to professionalize.
The next-gen influence
The urgency to professionalize through technology is in part driven by the increased involvement of the next generation of the wealthy. They’re more technology-savvy by nature, and many bring their own financial industry experience into the family office. As a result, a demand for solutions that deliver real-time insights and can incorporate all asset types is now standard. Though varying by region, the next gen is also behind an increased demand for more socially responsible wealth management practices.
Impact and ESG integration
Though environmental, social and governance (ESG) and impact investing have become vilified in some quarters, those concepts are now mainstream within family office wealth management platforms. Whether through the platform’s own functionality or through data supplied via third-party connections, the demand is there, and service providers don’t see it reducing any time soon.
Emphasis on AI
Over 75% of the technology service providers focused on delivering family office solutions are currently incorporating AI functionality or planning its deployment, meaning the evolution evident in the past year is set to continue into 2024. While there was an almost universal desire to unlock greater capability through AI, many service providers specifically noted that they didn’t intend to introduce its capabilities until it aligned perfectly with their core purpose.
Continued growth potential
Despite the growth in family office software and technology, many family offices report that while they’re assessing all the options, they have not yet adopted a chosen solution. This indicates considerable room for growth in this sector as these companies discover the best-fit solutions for what is often an evolving list of needs.
Aside from these five key factors, the growth in the industry and pressure on technology service providers to meet such evolving needs are highlighted through the fact that 73% of surveyed software providers have expanded their workforce in the past year, with 40% establishing a presence in new regions to better serve an expanding customer base.
Along with four years of consistently reported year-on-year revenue growth, the picture is very much one of a maturing market. This justifies both the long-term commitment that existing service providers have to delivering solutions and the proliferation of new solution providers seen entering the market.
It will be interesting to track how things look a year from now. But with the growing number of family offices established worldwide and the need for solutions set to increase in line with this, it’s clear that the industry is rapidly evolving, with more crossover solutions and a continued demand for innovation.