Asia pacific is undoubtedly the region to watch for FinTech developments. Several private banks are one step ahead of players in Europe and the US in terms of delivering innovative client experiences – through technology-savvy branches, mature mobile banking apps, and advanced security features. Xiou Ann Lim talks to some leading players and examines the most interesting offerings in the region
Globally, retail and corporate banks as well as payments firms have taken digital engagement with clients to the next level by using technology innovation as a cornerstone of their business models. For private banks, this shift continues to be gradual.
In Asia, though, private banks have evolved and adopted new technologies at a rapid rate. Wealthy clients in Asia prefer to meet their relationship managers (RMs) face-to-face regularly, which is a cultural nuance, but at the same time they also view sophisticated technology provisions as must-haves services instead of a nice-to-haves.
Nifty new players such as China-headquartered Alibaba have shaken up the traditional banking makrket in Asia and made customers accustomed to easy, real-time services and personalised offerings.
Private banks in markets such as Singapore, Hong Kong, Taiwan are particularly forward thinking. Many are actively working with start-ups to identify new opportunities. Some regulators are promoting this culture of collaboration as well.
Singaporean private banks, such as DBS, continue digitising themselves and introducing niche offerings such as personal RM ‘avatars’ and investment dashboards. At the Private Banker International Global Wealth Conference in October 2015, Tan Su Shan, group head – consumer banking and wealth management, DBS Bank, emphasised on the importance of being aware of new technologies and maximising their potential:
"If artificial intelligence is indeed able to combine cognitive computing for structured and unstructured data as well as create an emotional linkage with the client, I want to know about it," she said.
PBI puts the spotlight on four private banks that are leading fintech adoption in Asia, currently, to find out what they are doing and examine their distinctive approaches.
A people-first approach to fintech at Credit Suisse
A year ago, Credit Suisse rolled out its Digital Private Banking platform in Singapore. The number of clients using it has increased more than 10-fold over the last year and the user base has almost doubled since access was extended to iPhones three months ago.
Francois Monnet, Credit Suisse’s head of private banking Greater China and sponsor of the Digital Private Banking project in Asia Pacific, says that clients have responded very positively to the platform. "A fast-growing number of clients are using the digital channel, logging in more often and spending more time on the platform," he adds. Monnet reveals clients they spend an average of around 15 minutes per login session on the digital platform and they log in an average of six times a month. "Our most active user logs in more than five times a day," he discloses.
Monnet says that the platform has given Credit Suisse more channels and data to better understand the clients’ investment preferences and behaviour. "We found that while clients tend to conduct their digital banking activities on weekdays, they are also using it on weekends," he shares.
The platform also provides insights on client usage preferences. Across all devices, Monnet says that the top three most popular functionalities are Portfolio Overview, Trade and Research. "In terms of devices, clients prefer using the iPad to view their portfolios, trade and get investment ideas while they use the iPhone mainly for quick viewing of their portfolios as well as acquiring news and insights on markets," he adds.
"We observe our clients using the platform to source for investment opportunities and ideas. Through the trading tools available, they are empowered to act on market opportunities at their own convenience while also maintaining a close dialogue with their RMs," Monnet shares. He says this has resulted in positive feedback from clients.
Despite its importance, digitisation in wealth management is complex. Not all players can undertake the challenges and commit significant investments and resources to fintech as several pieces need to come together.
According to Monnet, the first and most time-consuming part of the journey is to prepare the platform and banking infrastructure that will provide the services to the front-end applications. This includes the core banking and other systems to support the required security, automation and data standards.
"Once you have the platform ready, only then can you start building the client-facing application(s). That’s the sexy part because it is new, fresh and reinvents the banking value proposition for the client," Monnet says.
Additionally, Monnet cautions that the bank itself has to be ready to enable the service. "It’s a new target operating model and way of working together to be a 24/7, almost real-time business. This requires us to rethink the way we work, our processes and tools."
"It is complex to engage everyone in the organisation to embrace this change and understand what going digital really means," Monnet explains.
To help convey the substantial advantages of the digital private banking platform to both clients and front-office teams, Credit Suisse put in place an ongoing change programme. "This change process to adopt the digital private banking platform has been extremely successful with Credit Suisse employees and clients," he says.
Having all these pieces working together – an engaging front-end application fully integrated into the IT infrastructure of the bank and propelled by internal adoption – is a multi-year commitment.
"From the beginning, we designed and shaped our digital solution based on in-depth client discussions to get their valuable input," Monnet reveals. The features of the first product release were designed, developed and prioritised based on what these clients expect from the bank. "So, we are continuing to have regular conversations with our clients and RMs to get their feedback and we continuously enhance our digital private banking platform to increase the breadth and depth of what we offer digitally," he adds.
Monnet views technology as an enabler and not a replacement: "Our RMs will remain at the centre of the client relationship and private banking continues to be a people-based business." He believes that new digital capabilities are giving the RMs a new platform to better serve their clients, focus on higher value-added advisory activities and manage higher volumes.
"We see the digital platform as being complementary to the expertise of our RMs. We are simplifying access to the knowledge and insights of the bank, so our clients can identify and act on the information that is most relevant to them – whenever they choose," Monnet says.
The emergence of fintech may seem to be highly advantageous to the private banking industry but it does bring it’s a fair share of threats and Monnet believes that cyber security is one such element at risk: "I believe our peers in banking and finance as well as other sectors face the same threat. As a leading private bank, our first priority is client security and privacy – we take it extremely seriously."
Monnet discloses that the digital private banking platform will be rolled out to the Hong Kong booking centre in the mid-2016. New features, functionalities and language capabilities will be added.
Singapore’s OCBC broadens its wealth management reach through fintech
While most private banks are concentrating their efforts on improving their digital proposition for high-net-worth (HNW) private banking clients, OCBC in Singapore is using fintech to make wealth management services available to more people. To further this agenda, the bank launched its OneWealth app in March 2016.
Calling it the "democratisation of wealth management", head of e-business Singapore, Aditya Gupta, explains that advisory has traditionally been restricted to the HNW segment of private and priority banking clients. "But if we marry digital technology to wealth management, we have an opportunity to make quality advisory more accessible and personalised for a much larger group and to segments that have not had access to this – mass affluent, youth, first-time investors, etc. That was the concept behind this app," he says.
The OneWealth app – which took 9-10 months to develop, prototype and test – provides up-to-date market information and recommendations from OCBC wealth experts directly to clients’ mobile devices. "We have consciously curated the content into simple bite-sized pieces of information," says Gupta. Users can also view their portfolio in real-time. "We give users contextual alerts. It’s relevant to their investment holdings and not a generic text message," he adds.
Although the app was only launched recently, it has already been downloaded about 15,000 times. "The initial engagement levels are also high – clients come back to the app every day because of the daily updates. They’re also interacting with it by saving articles, giving feedback on social media and logging into their portfolios," Gupta reveals.
While some functions are similar to what’s offered on the online banking website, the OneWealth app was developed with a mobile-first perspective. "We’ve redone the way content is presented and also increased engagement as compared to the website," explains Gupta. There’s a newsfeed that’s designed based on user feedback, which allows them to customise what they want to see. The app also has a generic newsfeed and one that’s based on personal holdings.
Gupta shares that customers who are using the app for the first time are happy to manage their portfolio holdings on their own. "There are also customers who are already tied to a RM or prefer to have a hybrid model where they want to see content but still meet an advisor to transact or get additional advice," he adds.
Gupta says there are plans to add a buy-and-sell function to the app. "The reason why we didn’t do that in the first phase was because we wanted people to familiarise themselves with the app," he explains.
OCBC will also be introducing a fingerprint biometric-based access to clients’ portfolios so that they don’t have to go through a complex log-in and two-factor authentication process. This comes from feedback that users want easier access to their portfolios.
"We want to continue to simplify the wealth execution," Gupta says. Speaking about the bank’s innovation lab – The Open Vault – he shares that rather than taking the standard approach of banks where they start from the fintech companies and then look for solutions, OCBC started with their problem and opportunity statements before identifying partners.
Currently, the bank is running an accelerator programme with venture capital firm Nest. Gupta reveals that two or three of the fintech companies participating are in the wealth management space. "We will be providing them with sandboxes to build prototypes for us," he adds. "We’ve taken a step in the right direction, so that’s encouraging."
Fintech in Citi Private Bank: Getting it right the first time
Citi Private Bank’s Investment Lab developed IDEA in 2014 with the aim of helping their clients with cash and liquidity solutions, deposits, lending, estate planning and investments.
According to global head of Citi Private Bank Investment Lab Philip Watson: "IDEA helps us better understand our clients and what they’re exposed to as well as what types of investments they have." It also makes recommendations and helps to identify risks in their portfolios.
IDEA consolidates all these pieces of information and cuts through the noise to get the most relevant information and channel that to the client as quickly as possible. "This enables the advisors to instantly understand who is impacted by what," says Watson.
As efficient as the platform is, Watson doesn’t think robo-advisory will completely replace relationship managers anytime soon. "In Asia, we look after approximately 5,000 individuals and families – the needs differ from client to client," he explains. While he believes that the usage of data and technology is empowering, private banking delivers very unique solutions to the needs of individuals. "I don’t see competition between the two," he says.
"It doesn’t substitute the dialogue that’s supposed to happen with the client about things outside of the insights that data can provide," Watson reiterates. These could be transition or changes in the family or transfer of wealth between generations. Instead, he believes that there’s a natural fusion that enables a productive dialogue to happen with the client.
Apart from the ‘softer’ issues in wealth management, Watson also believes that fintech will not be able to fulfil clients’ need for education.
"One thing we’ve observed is that our clients have a great appetite for education," he shares. The Investment Lab produces about 1,500 case studies for Citi Private Bank clients every year. So – while education can be facilitated through technology – he believes that there are some rudiments that are human-to-human, which cannot be replaced.
The Investment Lab – which operates out of London, Singapore, Hong Kong and New York – is working with a number of fintech firms on several plans.
"What I find so exciting about the fintech community is that there is seemingly no boundaries as to what can be achieved with the technology," Watson says. But what he finds lacking is the awareness of the internal workings of a private bank and the ways in which clients engage with them.
"There are some regulatory and compliance features that need to be embedded within fintech solutions," he explains. "While the technology can provide solutions, there are a few hurdles that the fintech community need to get through – but they’re not insurmountable, it just takes experience," he adds.
Watson’s philosophy when it comes to innovation is simple: "We want it to work as originally planned." He says that the speed at which they can bring innovation into the BAU (business-as-usual) is dependent on a number of factors. "When we introduce disruption, we want to have anticipated the broadest range of challenges that may arise in that first period – because that first period is an extremely important one," he adds.
"If you introduce disruption in a bid to be the first to market and for all of the positive reasons you may have had for accelerating it, the investment of time that you have to make in order to repurpose and win back the user base is significantly larger," Watson cautions. "You can lose a significant amount of time – more than what you gained from being the first to the market."
To Watson the nuances of private banking tend to be more client-specific. "There’s no question that there are some differences between regions in terms of investment behaviours but our clients do employ us – amongst other reasons – to access opportunities outside of their own region. They tend to have a global outlook," he explains.
The Investment Lab is trying to embrace changes that are happening within the market – both in clients’ buying behaviour and within the product landscape. Watson reveals: "Our clients are increasingly aware of the opportunities available to them in the global sense but they frequently lack the time and tools to evaluate all of them and do a peer group analysis across those opportunities. These are things that we’re investing our time in at the moment."
Fintech at the centre – not an extension – of UBS
UBS’s innovation centre EVOLVE has been testing, learning and applying several different "Proof of Concepts" to understand how they best fit into the UBS ecosystem. According to the Chief Digital Office (CDO), clients want more digital touch points and efficiency – so, a lot of the digital projects will kick off from the innovation centre. "Our management is committed to ensuring that digital isn’t just an extension of UBS, but central to our transformative efforts to be future-ready and remain the world’s number one wealth manager by AuM."
Revealing that there are several plans in the pipeline, the CDO adds that "there will always be pockets of resistance – like any other form of disruptive influence". However, the private bank’s management has embraced digital and understands the need to stay ahead through it.
"Externally, we ensure that all digital changes begin with what clients want and end with them as well," says the CDO – adding that they are involved from the testing phase and that many have stepped forward to volunteer their time and feedback to help UBS improve. "UBS doesn’t believe in designing or building without putting clients’ needs first."
Internally, the CDO has been working with UBS staff on human-centred design. By the end of 2016, several dozens of UBS staff members will have gone through workshops to flesh out principles, help participants better understand digital transformation and how to apply it within their units, PBI is told.
Has UBS identified any potential technological threats to its private bank?
"Everything can be viewed as an opportunity. Even robo-advisory isn’t considered a threat. We know what our clients want and we believe that pure robo-advisory services are not going to make a huge dent in the private banking space in Asia," says the CDO, adding, however, that perhaps the biggest fintech disruption may come from China – where companies such as Baidu, Tencent and Alibaba are reshaping the digital financial services model rapidly.
"We are always looking at ways to get better. To say that we’ve got enough is a mistake. We believe we have the best mix possible of high-tech and high-touch to serve our clients – but that doesn’t mean we will rest there."