As costs and compliance requirements surge, improving frontline capabilities through technology and process re-engineering has become a priority for Asian wealth managers. The latest BPA webcast shared recent research findings and discussed the importance of technology in todays market
The Banking & Payments Asia webinar on May 22 2012 identified the shift of key investment priorities to frontline processes and technology, and provided some examples on how banks have used technology to give frontline relationship managers additional firepower.
The first speaker, Thomas Zink, associate editor of Banking & Payments Asia, shared findings of a research conducted by VRL Financial News in association with Oracle, ensuing in the white paper: Empowering Relationship Managers in the Frontline.
Driven by four key challenges: compliance, human resources, cost and revenues and customer expectations, banks have identified five priorities: automating compliance, managing relationship manager (RM) attrition, deepening customer relationships, increasing process efficiency to save costs, and increasing RM efficiency.
Zink said: Our research showed that the surge in regulation to protect customers, minimise anti-money laundering and increase risk management standards are forcing banks to put considerable resources into frontline training, supporting technology, process re-engineering and RM retention.
This has put even more pressure on the banks to manage the already high cost of the private banking business. One of our Singapore respondents estimated that compliance has increased cost-to-income ratios by 5-10% in the last five years.
As a result, wealth managers have started, and continue, to invest in technology seeking to support relationship managers, from know-your-customer automation, risk profiling, product suitability, and client and regulatory reporting over basic contact management and task-planning tools, towards integration of all accounts and systems across asset classes to get a holistic view of the customers portfolio.
For some banks this also means a break with traditional concepts of private banking, for instance through the introduction of digital channels and bringing in data and analytics to support RMs through processes such as scenario modelling, predictive analytics and portfolio stress testing.
The second speaker, Bhaskar Jayaraman,vice-president of product management for Oracle Financial Services, confirms these findings.
One of the key areas where we have seen more activity from wealth managers is the development of a multichannel capability to increase access and reach for their customers, he said. The objective is to allow a seamless conversation between customer and bank, well integrated into daily interactions of the client, allowing him to manage his wealth with ease and at his convenience. This increasingly goes beyond viewing and allows customers to actively transact.
Jayaraman added: We are also seeing more activity in improving decision making through data and analytics. This means, for instance, a better presentation of information to justify decisions by comparing how markets have moved vis-a-vis the customer portfolio.
Data and analytics also allow what-if simulations and portfolio stress testing. It can also facilitate product comparison including the specific risk characteristics and suitability. This helps customers and relationship managers to focus on relevant products in the flood of products they are exposed to every day, Jayaraman said.
In the following Q&A session, the panel discussed the need for a differentiation between retail or emerging affluent core systems, and high net worth systems.
Given the small volumes and high values in the high net worth individual (HNWI) business, there is simply no room for mistakes, said Jayaraman. For this reason most private banks have introduced separate systems for the affluent segments to manage the higher product complexity and sophistication of the customers.
Our research showed this is particularly true for the mature markets, said Zink. Wealth managers in Hong Kong and Singapore said that the requirements of a wealth management system go far beyond what a retail system can deliver. Our China respondents on the other hand, seeing private banking as more of the nature of retail banking with perks, use multiple systems for HNWI banking, but no specific wealth management system, added Zink.
The retail banking system is used for more basic tasks such as deposits and transactions, while other products are run on the systems of the relevant business divisions such as treasury, corporate banking and investment banking. The system infrastructure is siloed and completely lacks integration and a holistic portfolio view.
To listen to the detailed webcast, please visit our website http://www.vrl-financial-news.com/bankingandpaymentsasia/whitepapers. There you can also download the white paper providing the comprehensive analysis of the research on front-line automation, which was published in April 2012.