The coronavirus pandemic forced wealth managers to adapt to new surroundings at speed, but why did it take an outbreak to inspire this change? And will the sector continue to embrace digital solutions? Patrick Brusnahan speaks to Avaloq’s Jürg Hunziker to find out more
Wealth managers and private bankers have had to work remotely, as have many, during the Covid-19 pandemic.
This is not a natural system for an industry that focuses on relationships and the human touch; however, many firms have made the changes and continue to serve their clients. The question is whether these changes are permanent.
Avaloq, a Switzerland-based company that deals in banking software, believes the pandemic “expedited” the changes.
A positive experience?
Speaking to PBI, Jürg Hunziker, group chief executive at Avaloq, says: “First of all, the last eight weeks was, for us, a very positive experience. We were able to see that our systems are robust, resilient and reliable.
“We had lanes in March when volumes went up like crazy. We had volume requests up 500% on our system and we were able on our SaaS [software as a service] and BPaaS [business process as a service] platform to scale. We had not a single incident; our customers were able to run globally. We are starting to see the new normal.”
So what does this mean for platforms in wealth management?
Hunziker continues: “I’ll give you an example: one of our customers was able to send their employees home within 48 hours, because we were able to with our piece of software in sensitive data segregation. If you leave the office, you can take your laptop as a private banker and you do not see the customer details or detailed confidential information. You only see it in a way that actually allows you to work from home. Our customers were able to do that very quickly.
“We have other customers, or other market participants, which had huge difficulty because they realised that, for confidentiality reasons, if you have staff working at home, they are in breach. They couldn’t run it.
“Our technology allows you to actually work from anywhere, to be fully compliant with your local regulators and authorities as well. In addition, you can provide the private banking service with AAA guaranteed service for customers.”
Hunziker believes the coronavirus situation will “trigger some decisions” from banks regarding technology. He explains: “Covid-19 showed that change can happen in a very short time frame, if you’re forced. If you don’t have political and endless conversation, and you suddenly realise you need to change.
“For example, you need to send people home, run a business, be really reliable and robust, innovate. It was possible.
“If you would have asked a CEO of a bank if it was achievable to upgrade or migrate some of your technology remotely, they would think it was impossible. You need to have the best people on site; we were able to change that. That gives me a high degree of confidence that technology will even be more important for the months and years to come.”
The situation changed at Avaloq. Where a member of staff might work from home once every two weeks, now it has been proven they can do it regularly.
“It just basically expedited the change. ‘I couldn’t meet the customer’ or ‘I couldn’t get a physical signature’ are no longer things. We had to get the compliance tools in place and then we are able to onboard them, send documents, investment proposals, advice for digitisation. This will be the new standard,” says Hunziker.
He continues: “I would say that if private banks went through a normal approval process, without Covid-19, to send their people home, this would have taken several years. Many compliance issues would have come up and needed thousands of days of lawyers spent.
“Covid-19 forced us all to be pragmatic and focus on what is important, which is the customer. It is about making sure the customer feels that they are a customer, and the rest takes care of itself.
“This pragmatism has helped us to focus on what’s really essential: why do I bank with you? Why do I trust you? Why do I give you my money and not to someone else? This needs to be at the core of your question as much as the bad technology. I think that is probably the change that we will see happening.”
There are still many issues to unpack, but what is the most common problem with digital and technology for private banks?
Hunziker concludes: “Some banks have taken the courage and addressed their total infrastructure. It may take two or three years and a completely new digital approach. If you just do a piecemeal, best-of-breed approach, you’re probably