Technology
Crunch Time At Private Banks As Next Gen Demand “Institutional”-Style Reporting
The tumult in the markets has inevitably refocused the attention of private banks on reporting. But it is crucial that banks take into account the different needs of the next generation of ultra high net worth individuals, according to the software analytics provider StatPro Group. Here Michel Lempicki, corporate development director, gives his take on the future of reporting at private banks.
Editor's Note: The tumult in the markets has inevitably refocused the attention of private banks on reporting. But it is crucial that banks take into account the different needs of the next generation of ultra high net worth individuals, according to the software analytics provider StatPro Group. Here Michel Lempicki, corporate development director, gives his take on the future of reporting at private banks.
For many private banks today, the process of transferring wealth is a major challenge. The older generation, who were accustomed to quarterly meetings and paper reports of their positions, have a different perspective to the younger generation inheriting the wealth.
By comparison, today’s UHNW clients have requirements close to that of institutional investors and are now demanding the same type of information, requiring access to data by geography or asset class in order to check on their portfolios.
The next generation
Generations brought up with internet banking access want to see line-by-line data, recent trades and so on – not just the bottom line. As a result, the quality of the information shared between the private banker and the client is changing dramatically. Client relationship managers are now expected to fully validate their strategies and explain any mistakes to their clients.
Furthermore, through interactive reporting, clients will have already accessed their portfolio data and can arrive at the meeting with a series of questions and fully-prepped – instead of reacting ‘on the hoof’ to the situation regarding their portfolio and being unprepared to ask the correct questions.
The latest technology means that private banks can segment their clients to give them access to certain information only – all from one application. The banks can define whether they want to give complete access and interactivity and also the frequency and type of reporting, enabling some clients to run their own analysis in some circumstances.
Other clients may still prefer simple monthly reports, but the important feature is that it is delivered from the same application. The underlying data is always the same and can be viewed by the portfolio manager, the client relationship manager and the client. This therefore also solves the data consolidation problem - a major issue for private banks. Once the data has been loaded into the middle-office application and computed, the client relationship manager can decide whether the reporting is complete or incomplete, dynamic or static, accessible or not accessible, daily or monthly and so on.
Simplifying the process
Many private banks have tens of thousands of small portfolios. Since the Madoff crisis, these banks recognise the need to offer an added value service to their clients. Interactive, flexible reporting could be an answer to that need.
A private bank could offer such a solution as an option to their clients, potentially requiring them to pay on a per portfolio basis. In this way, such a service could be a new source of revenue for private banks. Switzerland, Luxembourg and Hong Kong are likely to be the three first markets that show demand for this type of service.
Technology now gives private banks a "segmentation of one". Asset managers can precisely determine the nature and timing of reporting information. The mayhem we are seeing in the markets at present will only accelerate the shift toward this form of dynamic client reporting within private banks.
