Digitisation in private banking: Insights from UK wealth CEOs
Digitisation has become increasingly important in the private banking sector, transforming the way financial services are delivered and reshaping the industry as a whole. This is evident in technology’s ability to enhance accessibility, expand service offerings, improve operational efficiency, enable data-driven decision-making, and provide a more personalised client experience.
Private banks that embrace digitisation and effectively navigate the associated challenges are well-positioned to thrive in the increasingly digital landscape of the financial industry. Citywire recently brought together CEOs from some of the UK’s largest private banks to discuss how they’re seeing this impact.
How are private banks adapting with the rise of digitisation and technology?
Mouhammed Choukeir, CEO, Kleinwort Hambros states that, “in some ways the private banking industry has changed a lot, in other ways it’s not changed at all”, and goes on to explain that the industry should be looking at how technology facilitates and adds to the value they provide.
David Dulacher, CEO, Julius Baer added to this by saying that technology can be used in two ways; to automate complicated processes and to solve issues caused by clunky legacy systems – either by providing greater insight into client data or to link them together.
This statement echoes our views here at Delio. We often find that process automation and operational efficiency gains is how our technology can benefit clients the most. Historically, institutions operating in private markets have relied on labour-intensive and time-consuming procedures. By digitising the complete investment journey, encompassing origination through to portfolio reporting, firms can unlock valuable time and cost savings, empowering their teams to concentrate on client-facing activities that generate revenue.
Technology doesn’t replace human interaction
It’s now expected that financial institutions will offer at least some level of digitisation across their ever increasing range of services. As Annabelle Bryde, Head UK private bank and crown dependencies at Barclays explains, “clients are changing. They are wanting more digital offerings and digital interactions, whereas before they’d come by or call us. It’s a huge topic and is one of the big challenges for the industry.”
However, it’s important to get the balance between technology and human interaction right. Duncan MacIntyre of Lombard Odier UK stated; “we’re not looking for technology to replace human beings. We see technology very much as an augmenter of the banker, rather than a replacer of the banker.”
Eva Lindholm of UBS Wealth Management agreed by explaining they take a hybrid approach, and highlighted that they see a lot of value in what their client advisors offer; “With the markets having welcome backed volatility, our client advisors have never been as busy as they are today. So, I would say old fashioned tech like the telephone are very much in demand right now.”
Using a hybrid approach of technology and in-person interaction can provide an enhanced, holistic service for clients. The technology allows for easier, more efficient communication on a 24/7 basis, meaning clients don’t need to wait for a client advisor to be available to discuss opportunities. However, for more complex or commercially sensitive conversations, the value of in-person meetings remains an option.
The Delio platform enables institutions to enjoy an enhanced level of visibility into their clients’ interactions and activities. This insight proves invaluable during client conversations, enabling more productive and commercially driven discussions based on the specific investment opportunities they have explored within the platform.
Catering for the next generation
Another challenge private bankers are seeing is the ‘Great Wealth Transfer’ in which an estimated $30tn of generational wealth is expected to be passed onto the next generation in the next 20 years. David Dulacher explains, “I think the wealth transfer that’s expected sends a warning shot to wealth managers. Statistically, 90% of that next generation could change wealth manager, they’re not willing to stick. It could be that we need to improve digitalisation so there’s different forms of interaction.”
Duncan MacIntyre commented that Lombard Odier have just conducted a survey with their next generation and millennial clients, ‘How a younger generation is reshaping private banking’. Their research found that younger clients want to be more personally involved with their investments, expect transparency, and have a thirst for knowledge.
Technology can help greatly with these challenges as it enables personalisation of content, even on a large scale. As David Durlacher goes on to explain, “what the client gets is a very personalised form of interaction with that institution that enables the wealth manager to be truly client-centred.”
This personalisation could include reference to deal preferences or even simply sending a tailored email about an investment opportunity that the client has interacted with on a regular basis. Having access to this level of personalised data enables your client to feel valued and listened to, while also making their interactions more tailored.
In conclusion…
Private banks that effectively embrace digitisation and navigate the associated challenges are well-positioned to thrive in the increasingly digital landscape of financial services. While technology plays a crucial role in automating processes and enhancing efficiency, the importance of maintaining human interaction and using technology as an augmenter of these relationships, rather than a replacement for bankers, will be key.
If you want to discuss how Delio’s technology is currently helping financial institutions across the globe manage their private markets propositions, get in touch.
