Jean-François Mazaud, Head of Societe Generale Private Banking
“Fifty years ago, SG was regarded as a pioneer in new product areas like leasing and project finance,” he says. “Thirty years ago, it was the pioneer among European banks in structured products and derivatives. Today, the group is setting new standards in the digitalization of the bank.”
As a compelling example of SG’s leadership in technological innovation, Mazaud points to the success of France’s largest pure online bank, Boursorama, which is 100%-owned by Société Générale. In the first half of 2018 alone, Boursorama attracted more than 220,000 new customers, many of them young savers or depositors, which represented a 53% increase year-on-year and a total of 1.5 million customers since July.
Société Générale’s more recent commitment to digitalization in retail banking is visible at several other levels, with Mazaud pointing out that its French clients now have at their disposal one of the world’s most advanced banking apps.
“Open your app and you can have instant internal as well as external aggregation across accounts, you can get access to services ranging from life insurance to broking, as well as daily banking with a straightforward and appealing look and feel,” he says.
For the time being, he adds, these apps are available only to the bank’s clients in France, but he is confident that it is only a matter of time before they are rolled out to customers in other core markets.
“Our challenge now is to amalgamate our intelligence in digital banking and transfer it to end-users wherever they are,” he says. “This is not just a question of adapting the front-office application, but also of building the open digital architecture that lies beneath it and adapting it to local regulations.”
Mazaud says that it is important to recognize the limits of digitalization, which he believes will complement rather than displace the physical contact that private bankers have with their clients.
“We’re not going to extremes and forecasting that bankers will be replaced by robo-advisers any time soon,” says Mazaud. “We begin from the premise that the role of digitalization and artificial intelligence is to help bankers service their clients more efficiently. This is why we are committed to a phygital-based strategy.”
Phygitalization of private banking, says Mazaud, means that routine services can be delivered more quickly and more efficiently, at a reduced cost in a digital form, freeing up relationship bankers to attend to clients’ more complex and bespoke requirements with physical presence.
For investment advice, clients in France now can opt for a digital interface and switch at any time to a physical interaction with their banker. The service, branded Synoe, generates automatically proposals with a risk-based approach and facilitates straight through execution.
There are other reasons why SGBP is committed to continued investment in the digitalization of its operations. Foremost among these is that a phygital approach to servicing clients can be an efficient way of expanding market share at a reasonable price. This, says Mazaud, is especially important at a time when regulatory change is exerting seemingly ever-increasing pressures on costs.
Another key reason is time optimization. “Ask virtually any banker what is occupying an always greater portion of their time these days and they will tell you that it is regulatory and administrative tasks,” he says, adding that regulatory requirements are more likely to intensify than subside over the foreseeable future. “If you assume that costs will continue to rise while the number of bankers remains stable, digitalization is clearly an efficient way of improving our client service and of tackling the profitability issue.”
Equally, the enhanced efficiencies generated by digitalization are an appealing way of freeing up capacity to attract a larger client base and improve the quality of service. Mazaud explains that the minimum threshold of liquid assets established by SGBP for its clients varies from country to country. While in the UK the minimum is £1 million, in France it is currently €500,000. “This is twice the minimum level of our main French competitors, which usually start at between €250,000 and €300,000,” says Mazaud. “We have maintained a higher minimum to protect the delivery of value-added solutions. Digitalization will complement it and should help to improve our client experience.”
The technological support that SGPB enjoys from being part of one of Europe’s largest and best-rated banks is aligned with its wider policy of exploring synergies across the group in order to broaden the options open to its client base. A striking example of closer integration across the group is the recent strengthening of the relationship between SGPB and Lyxor, the asset management unit 100%-owned by Société Générale.
As Mazaud says, Lyxor has traditionally combined the capabilities of a managed account platform and hedge fund service provider with its pre-eminence as a manager well-regarded for developing ETFs, as well as smart beta and quantitative solutions for institutional clients.
“A year ago we reached a strategic decision to add a retail leg to Lyxor by extending its functions to acting as a service provider to the private bank,” says Mazaud. “We have already revamped our model portfolios with the support of Lyxor and established a single strategic house view. The challenge now is to more closely integrate the capabilities of the two entities. This means developing innovative, smart asset management based on an open architecture on the one hand, and the tailor-made, client-driven and sometimes more classical asset management that you find in private banking on the other.”