Your correspondent recently attended Temenos' annual conference, which was held in Lisbon, Portugal.

Private banks risk losing clients to their retail counterparts if they do not enhance digital offerings, an executive from a global financial technology giant has warned. 

Wealth management institutions, generally speaking, are far behind retail banks in the digital race, with some exceptions in the Asia-Pacific and US markets, according to Pierre Bouquieaux, product director at Temenos' private wealth management unit. 

“More and more wealth institutions are realising they must do something [in the digital space],” said Bouquieaux. “If not, they will see retail banks starting to take some of their business because they offer more digital outlets and interaction with customers.”

Bouquieaux said that although the digital space within the wealth management and private banking industries is “positively changing”, they are still “clearly behind” in terms of online and mobile channels available to clients. 

He was speaking to this publication on the sidelines of the 2017 Temenos Community Forum annual conference in Lisbon, Portugal. 

Bouquieaux said that one of the most prominent changes in the industry in the next decade will be the transfer of assets from current wealth holder to the next generation. A study by Accenture forecasts that some $30 trillion of wealth will fall into the hands of the next generation in the next few decades.

Bouquieaux cautioned that if money managers fail to adapt their strategies, including digital, and business models to chime with younger clientele, they will risk outflows of assets. 

“Transfer of wealth will massively change the industry in the next 10 years,” said Bouquieaux. “This puts a lot of pressure on wealth institutions' technology and digital offerings, as they absolutely need to be ready to deal with a younger generation of clients.”

But he said pressure is not only mounting on firms to ramp up spending on technology, but also to hire younger advisors and relationship managers to deal with younger clients. 

“It is not just about tech - if you look at a lot of traditional private banking models today, relationship managers are typically senior, older people,” said Bouquieaux. “Will wealth holders aged between 20 and 30 want to deal with someone who is 55 or above? The answer is no.

“[Wealth institutions] need to bring in new blood and work on how they are going to do this.”

Bouquieaux also suggested advisors spend more time speaking to next-generation wealth holders to hear from the horse's mouth what they actually want in terms of digital offerings. 

“I still see a trend of wealth managers saying: 'Why should I spend time talking to his son, grandson etcetera?',” said Bouquieaux. “But, in fact, it is better to talk to the younger generations because they are ultimately the ones who will end up with all the money and become clients sooner than you think. It is essential to know what they want.

“Studies show that transfer of wealth poses a big risk, and managers can easily lose a lot of assets if they do not pay attention to the next generation of clients.”

And as for what these future clients want, Bouquieaux assured digitisation is top of their lists. 

However, he added that institutions must not only work to digitally serve the end clients, but also the advisors dealing with them. 

“Wealth institutions must make sure they are not just serving the end customer digitally,” said Bouquieaux. “In retail, it is far easier, because the is the key goal: to serve the end client. But in the wealth space, the most fatal mistake would be to copy retail. Firms must take care of their internal staff, I.e advisors, relationship managers, as they also need the proper digital tools.”

It is critical that advisors are equipped with a digital toolkit if they are to successfully and efficiently advise next generation clients, he said.