Technology
WHAT THE CONSULTANTS SAY: EY On Next Gen, Digital Issues In Wealth Management
Consultants at EY Financial Services Switzerland run the rule over the technology side of private banking, but caution that the digital revolution will not replace face-to-face relationships, but augment them.
This publication has approached a raft of consultants
operating in the wealth management sector to give their views
about a range of challenges and opportunities for the industry in
different parts of the world. A number of articles will be
released in these pages in the coming weeks and we hope readers
find them stimulating. The articles have been sought by this
publication and also by Bruce Weatherill, of Weatherill
Consulting, and also chairman of ClearView Financial Media,
publisher of this news service.
This item is by Bruno Patusi, a partner at EY
Financial Services Switzerland and head of wealth and asset
management. Bernhard Schneider is senior manager in the customer
practice at EY Financial Services Switzerland. The firm talks
about the technology side of private banking. While it is based
in Switzerland, its arguments have global resonance.
The private banking industry has stabilised noticeably since the
outbreak of the financial crisis. Between now and 2017, annual
growth in the investable financial assets of private households
is expected to be 4.8 per cent. This, combined with demographic
trends and rapidly advancing digitisation, represents a
significant opportunity and challenge for the private banking
sector.
Today’s generation of private banking clients is increasingly
thinking about how to transfer its assets to its heirs. Based on
current knowledge, the younger generation in the 21-36 age group,
the so-called “millennials,” is keener than ever to preserve its
assets. In other words, it is equally or even more risk-adverse
in terms of investment strategies than its parents’
generation.
Unlike the latter, the millennials are accustomed to dealing with
the latest technologies on a daily basis. This imposes new
challenges on the advisor of private banking clients. While
clients were previously supported and advised by their personal
client advisors, with growing digital networking, clients will
increasingly take over control of their banking relationship and
decide when, how and how often they wish to make contact with
their banks and advisors.
Based on experience in other sectors, it is only a matter of time
until digitisation takes a firm grip on private banking.
Developments in the digital world, such as “crowdsourcing,” will
have a permanent effect on customer behaviour and will result in
close scrutiny of conventional private banking products and
services including their prices.
At the same time, digitisation is not only restricted to the user
interfaces immediately visible to clients and client advisors
(“front-end”), to which we anticipate it will be identical in the
digital world, but extends along the entire value chain to the
middle and back office (“back-end”).
Digitisation also enables processes and procedures to be
structured more efficiently and client data to be used more
effectively. After all, in the digital world clients leave behind
significantly more fingerprints, which, thanks to
state-of-the-art data analysis tools and technologies, banks will
soon be using for tailor-made advertising of products and
services.
The trend towards digitisation will not replace personal contact
as an advisory and distribution channel which will continue to be
the primary client retention element, but it will significantly
expand and enrich it. Properly implemented, digitisation offers a
major opportunity for positive differentiation in the
marketplace.