This is the next in a series of reports of the recent WealthBriefingAsia Summit in Singapore. The focus for this item is the best way to incorporate technology into the industry.

Intelligent use of technology can make private banks more efficient and complement existing and future client relationships but fintech isn’t a replacement for people, delegates attending the recent WealthBriefingAsia Summit in Singapore heard.

Digital offerings can free up relationship managers from time-consuming administrative chores and give them more opportunity to talk to clients – and find new ones, the summit, held in the luxurious surroundings of Raffles Hotel, was told.

The debate comes at a time when the air has been thick with talk about the rise of so-called “robo-advisors” and their perceived threat to traditional business channels, as well rollouts of mobile platforms and other offerings.

Debating the topic “Where Next For Wealth Management Technology?” were Laurent Bertrand, head of business insights and chief information, UBS Wealth Management, APAC; Chuck Bokman, partner at Capco Consulting; Simon Cornwell, co-founder, Vermillion Software; François Monnet, chief operating officer, Credit Suisse; Alessandro Tonchia, founder, Finantix. Sponsors for the summit were Appway; Milltrust International; smartKYC; Vermillion; BVI Finance and the Financial Planning Association of Singapore. Supporting organisations were Standard & Poor’s MMD, ProFundCom and WealthBriefingAsia.

Credit Suisse’s Monnet (who was recently interviewed by this publication about his bank’s digital launch in Singapore), spoke about his bank’s foray into the digital space and what it adds to the bank.

“One of the issues we face in this industry is to provide a consistent client experience and that can only be enabled by techmnology…In Asia-Pacific we have as many trillions to manage as in the US, in reality we have only a tenth or 15th of the number of RMs; the issue is how to scale the business,” Monnet said.

“It [technology] is no longer a `nice to have’ but it is a `must-have’…The relationship is enhanced by technology...it is more client-centric and it is more real time,” he said.

Responding to the question as to whether client reporting is a cost he said it is also a “real value-add”. “Clients highly value good reporting…..it is a value-added differentiator.”

The key is painstaking attention to detail, Monnet said.

“The first time we designed our landing page, we went through 118 iterations in the span of two months to get close to what clients want. The process doesn’t end. A big benefit of tech is that it frees up time of RMs from having to deal with manual reporting and chores to focusing more on clients and winning over new ones. There is a top-line benefit,” he said.

“If an RM can spend 70 per cent of his/her time with clients instead of 50 per cent, that is not only a cost benefit but the top-line benefit of freeing up the client time is very significant,” Monnet continued.

UBS’s Bertrand said: “Digitalisation is about what we are already doing – these are the things not possible without digitalisation.”

He talked about the UBS advice channel and initiative and how, for example, it gives clients a portfolio update so that RMs can have a far richer and more useful conversation with clients. Asked about the disintermediation threat of tech, he said: “Technology isn’t there to replace relationship but to complement it.”

Asked about trends such as Big Data, he said: “We are talking about us getting better insights from the data. There is a whole new scope for the business, which I can group under three headings: volume, velocity and variety.”

Capco Consulting’s Bokman said that some private banks, in tech terms, are leveraging digital platforms from the retail bank in the same banking groups. He was asked about how firms are going about developing tech offerings.

“There are very few private banks having integrated aspects of social networks into their digital offering although many of them are trying,” Bokman continued.

Asked about issues around opening an account and speed of access, he referred to his US nationality and said that he had applied to the local branch of a global bank for an account and told that it would take about three weeks to open it, which some bankers told him was “quite good!”

Credit Suisse’s Monnet said the industry hasn’t plunged quickly into the digital world. “We don’t see much digitalisation in wealth management yet because it is complex. Three things need to come together and that’s where the investment goes. First the client application, the front end, that’s the sexy part, because it is new and fresh and reinventing the banking value proposition for the client. The second part of the exercise is to prepare the platform and banking infrastructure to provide the services to front end. It is an enormous effort to accelerate investment in basic core banking system to allow the automation to take place. This second part is sweaty and expensive; it deals with basic infrastructure front to back,” he said.

“The last part has to do with not the platform readiness but organisation readiness of the bank to enable the service. As soon as you empower the client, the client will pull services. The question is how the organisation can deliver that promise - this new target operating model, new way of working together to be a 24/7 and near-real-time organisation. This requires review of every single policy and process that has existed so far. Having all these three pieces working together is a formidable challenge and a multi-year commitment,” Monnet said.

“In an established situation where a digitalized front end is up and running, the cost of servicing a client through the digital front end will be half of the cost of an RM channel. If you combine 20 per cent of the business done through the digital channel, and 80 per cent done through the normal channel of the bank, based on a decent cost-income ratio of 70 per cent of a wealth management institution that is efficient and well-equipped, you would actually the run the business at a 30-35 per cent cost-income ratio for that 20 per cent of portfolio activity managed on the digital platform. The gain in terms of efficiency of service, equivalent to 5-6 points of cost-income ratio savings, is significant,” Monnet added.

Defectors

Vermillion Software’s Cornwell referred to recent research showing how many clients will leave a bank if it doesn’t have a good digital offering.

“I read in a recent survey reported in the Wall Street Journal that 57 per cent of HNW individuals aged over 40, and 80 per cent of those aged under 40 would consider leaving their wealth manager if they were not offered digital services. This is a fascinating statistic in itself, but my challenge to the industry is that wealth management clients are not just interested in any digital service – it has to be the right one," he said.

"Mobility isn’t just a new distribution channel to clients; it’s a new way of doing business. It should be seen as an integral part of a value-add business, not the latest technology fad. And in my view, the wealth management industry has been too slow in responding to this new approach. Rather than, for example, just letting investors access their monthly report from their iPad, the technology needs to afford more freedom to investors to ask questions and interrogate the performance data. It’s not about enabling investors to self-service; it’s about improving the relationship between advisor and client, and enabling the client to have more ownership. Simply putting a new digital front-end on your client reporting engine isn’t the answer. Giving investors the salient information in a digital format isn’t the answer either," he said.

 "My view is that investors need to be able to ‘pull’ the data that they require, not just receive what the wealth manager ‘pushes’ their way. Many wealth managers don’t want their clients to ask questions and certainly do not encourage them to do so. They see digital services as a way of giving more automated information to the investor. In contrast, I believe that the right kind of digital services should facilitate more client engagement and more trust," Cornwell continued.

Cornwell said the wealth management industry isn't moving fast enough. "Media, phone and other technology companies have changed their entire business models to reflect the opportunities presented by digital services. Unfortunately I don’t think that some wealth managers or many technology suppliers are moving at the speed the market wants to move at. If you introduce digital services to your clients, you need to consider changing your entire business model. It’s an opportunity, not a defensive mechanism designed to cut operational costs. Wealth management firms that are embarking on a mobility programme just because everyone else is doing it are missing the point," he said.

Finally, asked when wealth managers might get a return on all this investment, he replied: “I think you will see a return on all this investment over the next five years.”

Finantix’s Tonchia said technology gives a relationship manager many more tools to engage with a client. “Digital technology really enhances effectiveness of the RM. You can have more briefing material…it is more intimate to how the relationship is conducted.”

He talked about how tech enables pilot projects to test ideas, via focus groups and other channels. “Tech allows you to have these incremental developments that would not have been possible with older technologies.”