Private banking technology/innovation debate: Time to play catch-up on technology

By:
Helen Avery
Published on:

While other industries have embraced technology to win clients and become more efficient, wealth management and private banking are still finding their way. Euromoney gathered leading private bankers and nontraditional wealth advisers to discuss how the industry can embrace innovation

Private banking technology roundtable
  Private banking technology debate participants
Video interviews

Executive summary

• Retail banking has embraced technology, private banking has not

• Technology push is about improving customer care

• Clarity and simplicity is important

• Communication needs to be two-way

• The right to fail is key to innovation

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Helen Avery, Euromoney
We are constantly hearing that private banks have to improve the way they do business through technology. Is this overblown?

Bruno Lèbre (BL) is head of wealth management solutions, Société Générale Private BankingBL, SG Private banking clients are expecting at least what is delivered on the retail side, and retail banking has embraced the digital age, whereas private banking has not, so we have a gap that needs addressing. On another level, big data and data mining can be thought about in how we can improve the advisory side of the business.

Thierry Derungs (TD) is chief digital officer at BNP Paribas Wealth ManagementTD, BNPP Above all, what does the client want? We have been able to look at our retail bank and use what they are doing to our advantage. And we have involved everyone in wealth management from the back office, communications and front office to share their feedback on what is needed. It requires a lot of change, and while IT can move fast, you may have to speed up the business side or marketing, compliance etc because they are not used to working at that pace. But chiefly, this push in technology is about taking care of customers.

Jeremy Oakley (JO) heads KPMG’s wealth management strategy practice, advising wealth and asset managers, platforms and distributors on business strategy and M&A.JO, KPMG It is difficult to call where all the transformation will take place and how quickly. Let’s not forget a lot of the technology tools we have at our disposal have been around for a little while. Also our industry tends to get fixated on new technology and 'digital’ is an example of that. In a few years’ time we will not be talking about 'digital this, digital that,’ but rather, what does the technology enable? Rather than appoint people to chief digital officer, it should be chief of user experience or customer experience; what we’re really saying is we’re focusing on the customer experience and we happen to be using technology to do so.

Dena Brumpton (DB) is chief operating officer at Citi Private BankDB, Citi Our clients haven’t come to us and said: 'We need digital engagement’. But when you analyse the buying behaviours – even with the ultra-high net-worth client base – they are changing dramatically. How many of us now look at TripAdvisor before we go on holiday? Around 20% of Amazon’s sales are now generated from: 'People like you also bought…’ If you had told me a few years ago that that was how I was going to buy things I would not have believed it, but we are now looking to opinions of people we don’t know and have never met for guidance. Financial services will move in the same direction. We need to build a model that will take this into consideration. Add to that what is happening in the industry – the costs of delivering plain vanilla services, as well as the more structured products, has increased dramatically, as has the cost of complying with regulation – and the result is that we have to be more innovative.

Víctor Manuel Allende (VA) is the executive manager of private and personal banking in Barcelona at CaixaBankVA, CaixaBank And you can have all the technology you want, but it must make commercial sense. It needs to be used properly and built into the private banking discussion in a way that is sustainable. We look at technology in three areas: first, to support onboarding. Secondly, we use 'the Wall’ – a virtual space where customers and managers can interact and share documents and comments. And finally, the client experience.

Benjamí Puigdevall (BP) is the head of electronic channels in CaixaBank Group.BP, CaixaBank Our industry used to say it had multichannel strategies, but the reality was that those channels were completely independent. The client had a lot of different channels with which to interact with the bank, but they were in silos. Now, thanks to technology, we think the future is to mix those channels and create a single space for interaction. For example, Victor mentioned that we have a feature called 'the wall’. It’s been a very powerful tool for clients of all ages because of the convenience that it affords. We cannot operate as a pure online bank, but we can, hopefully, combine our strengths in the virtual world, as well as at branches.

Euromoney Jono, Travis, what are your thoughts about whether online banks and advisers like yourself will provide competition to the current wealth managers because of technology?

Jono Hey (JH) is head of user experience at Nutmeg.JH, Nutmeg We are not really competing, rather, we are here to fill a gap in the market, and technology has enabled us to do that in a cost-efficient way. So, firstly we’re providing a solution to those with say £80,000, who aren’t big enough for larger managers and advisers. It’s also true that a lot of people are still feeling disillusioned with the financial industry and are looking for something new and transparent. And some feel the current industry to be too complex – they want to do things online, they want to see all their investments at once instead of in parts. That’s why we are providing an online service – it’s the technology that enables us to scale a service to folks whom other managers and advisers would see as unprofitable and would therefore leave out.