In the last few years, private banks in Europe have increasingly focused on leveraging technology across the whole organisation. Meghna Mukerjee highlights the areas where private banks are maximising technology offerings to transform internal strategies and service propositions
Technology is no ‘magic bullet’ to solve problems currently faced by private banks. However, if implemented correctly, technology can go a long way to eliminate complexities, enhance operational efficiency and aid revenue generation.
Private banks in Europe are increasingly recognising the importance of technology and, in the last five years, many forward-thinking players have embraced it as a catalyst for growth and competitive positioning.
PBI outlines the areas in which European private banks are significantly prioritising and leveraging technology.
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Enhancing the client experience
Technology has been, and continues to be, a big mover in ensuring client-centricity. Private banks are rethinking aspects of their business and operating models, and leveraging improved IT capabilities across the organisation to maintain personalised services and receptiveness to clients’ needs, as well as ensure smooth client experience (CX) and satisfaction.
France-headquartered Société Générale Private Bank (SGPB) has transformed its digital interface. The transformation is one of three pillars of an all-round IT rejuvenation plan that the bank embarked upon in 2013.
SGPB’s digital ambition is part of the private bank’s overall strategy to expand its activities across Europe, Middle East and Africa (EMEA), and capture the growth potential of its client base, in line with Société Générale group’s strategic priority for digital transformation and innovation.
SGPB will link all its products and services to customers through a series of apps, and the digital transformation journey entails the deployment of a sophisticated e-banking platform for wealthy clients so they will have the spectrum of options to transact "bonds, shares, forex, money market, whatever the asset class", head of SGPB, Jean-Francois Mazaud, told PBI recently.
SGPB is looking to launch further e-banking platforms internationally through 2016 and 2017, with an aim to complete the digital transformation project in 2018 for all of SGPB’s locations.
Client relationship management (CRM) is finally coming of age in the private banking sector, and SGPB’s digital service includes a CRM tool and an enhanced portfolio management system that will allow flexibility in accessing information such as portfolio valuations, positions and performances.
"Technology is one of the key factors governing the way we are shaping our private bank for the future, as we continue to anchor client centricity as part of our DNA," says Mazaud.
The technology developments that most interest Mazaud are also those that boost CX. "As a connected bank, these include trends in how to improve the user experience, and the design of the user interface, as well as the internet of things," he says.
Netherlands-headquartered ABN Amro Private Banking offers a wide range of innovative online, mobile and social media solutions, including its mobile banking app, an iPad mobile office app, iPad Research, Web care team and WebEx advice, amongst others.
"In the Netherlands, our mobile banking app is being used more than 60m times per month," says Brigitte Seegers, spokesperson for ABN Amro Private Banking. Outside the Netherlands, ABN Amro is developing a private banking digital offering that consists a blend of omni-channel services combined with personal interactions. ABN Amro, on the whole, is investing 700m ($780m) up to 2017 in its IT systems.
"We have been a frontrunner in the field of internet and mobile solutions, and will continuously adapt to the clients’ changing needs. Through multi-channel services and interactions, we support our clients as they would like us to," adds Seegers.
Being client-centric and delivering seamless experiences is also top-of-mind for France-headquartered BNP Paribas Wealth Management. Thierry Derungs, chief digital officer at BNP Paribas Wealth Management, tells PBI:
"CX is our core driver. All our digital choices are driven by the added value they could provide to our clients. Our clients are modern, entrepreneurial and open to new technology.
"One of our priorities is to ease and improve client interactions to deliver a delightful and seamless experience. To fulfil this objective, we work with several technologies such as electronic signature, biometric authentication, real-time video streaming and others."
Derungs adds: "A bit more than three years ago, Vincent Lecomte and Sofia Merlo, co-heads of BNP Paribas Wealth Management, decided to hire me as chief digital officer. Since then, they have always been strongly committed to our digital strategy – not only budget-wise but also, much more importantly, by positioning the digital strategy inside the core priorities for the wealth management unit. CX is larger than a solely digital strategy but digital is one of its strong components."
One of the latest deployments at BNP Paribas Wealth Management is a new content management platform. The lender has also developed its Voice of Wealth app to educate and inform clients about investments and market trends as soon as they happen.
"The Voice of Wealth app has already received excellent results, not only in terms of downloads but in terms of return frequency and time spent per visit. Almost 40% of the visits last more than 10 minutes, with a bit more than 75% of clients coming back in less than three days," explains Derungs.
Enhancing advisor productivity through technology is equally important to private banks. Empowering advisors with a range of granular tools and training is an area in which private banks are investing.
SGPB’s Mazaud says: "It is equally important that our private bankers have the same level of digital accessibility as their clients, and become skilled at digital-product innovation.
"To nurture this shifting environment, we have implemented new methods which aim to integrate client and banker feedback (co-creation), provide quick delivery (test and learn)."
Improving data management and agility
Data management is crucial to the efficiency jigsaw puzzle at private banks. To ensure best practices and best-of-breed service in an ecosystem where client demands and regulatory burdens are growing fast, private banks need to get data management game-plans right.
Private banks are, currently, viewing data – structured and unstructured – as a core asset. There are different drivers behind gathering data – for the regulators, to manage risks internally and better make strategic decisions, and to understand and serve clients better across different generations, which is important for client segmentation.
"Following trends in artificial intelligence, machine learning, natural language generation and data visualisation corresponds to the need to be an intelligent bank," says Mazaud.
Derungs says: "Our interest in new technologies is in offering some clever combinations that allows us to deliver new services with strong added-value for our clients.
"As an example we, on the wealth management side, do not look towards blockchain for its money-transferring capacity. Our interest is in the combination of blockchain (secured data exchange), big data (advanced data analysis) and artificial intelligence (automated data quality improvement) to improve our know-your-customer (KYC) and client onboarding processes. They help us provide the seamless experience our clients expect."
Understanding client behaviour via the correct analysis of data can provide private banks with crucial insights on how different demographics of clients – especially comparing the older-generational wealthy to Generation Y investors – like to handle wealth.
"Our clients are more knowledgeable now, and there are more next-generation clients. Our business model is, therefore, focused on delivering real added value. We manage the trust that is invested in us by being in touch with our clients and giving them the right advice in complex situations," says Seegers, ABN Amro Private Banking.
The private banking industry has, in general, suffered from underinvestment in data-management capabilities. The challenge within many organisations is that the data is still fragmented across many databases and spreadsheets.
However, a shift is underway – from legacy to good practice in data management – at private banks, keeping the volume, velocity and variety of data in perspective.
Most private banks have not historically had an end-to-end data management project in place, but they are realising the importance of such a project – streamlined and complete with a clear roadmap and success metrics.
Two important pillars of SGPB’s all-round IT renovation project are based on storage of customer information and data analytics. "We have to be an agile bank through continuous delivery," says Mazaud.
"Our vision for the future is to be vigilant about where all the data we have is stored, and to try to have a common language that enables us to treat this information efficiently. We will also focus on data analytics, whereby we take data from the warehouse, treat it through algorithms, and send it back to the end customer through the bank’s front-end interface, or to the banker, who can present this information to our customers in an intelligent fashion."
There is substantial scope for private banks to use analytics to their advantage, and its importance will continue to increase.
Ensuring security and efficiency
Ensuring robust and up-to-date security provisions is at the heart of all technology and strategy developments at private banks.
BNP Paribas Wealth Management’s Derungs says: "Secured sites are, of course, very important, and we continuously improve them with a strong focus on mobile to fulfil our clients’ expectations. With a penetration rate of over 40% in many countries, our secured solutions evolutions are driven, again, by our CX program to provide the services our clients expect from us."
SGPB’s Mazaud adds: "We keep focusing on being a secured bank, and so are interested in developments such as electronic signatures, authentication and biometrics, security and data protection."
Alongside making platforms secure, private banks are also prioritising being more social, and using technology to do so. "As a social bank, we are looking, for example, at crowd-funding, social philanthropy, lifestyle management and social networks," says Mazaud.
Derungs adds: "Social media is also a recent progress we made, with excellent engagement results. We now have an efficient presence on several social media platforms, and we continue to expand them."
Private banks are also keen to use technology to simplify operational complexities and speed up long-drawn processes that are pain-points for banks and customers.
As regulators demand robust KYC and anti-money laundering architectures within private banks, many lenders are upgrading their IT systems to handle these extensive requirements.
Lengthy KYC due diligence processes have become a well-acknowledged, industry-wide issue. Detailed regulatory requirements have increased the volume of paperwork that clients have to run through. Its cumbersome nature is an enormous cause for concern for private banks, with some lenders taking up to three months to fully onboard a single client.
However, getting the client onboarding process right is vital. While manual processes still dominate, digitisation in client onboarding has become a priority for private banks. The challenge of easing this process is imminent.