MyPrivateBanking Blog
Daily Comments on the World of Wealth Management

Wealth managers and banks face big challenges in today’s fast-changing and technology-driven world. Growing client expectations and increasingly strict regulations lead to more and more complexity. Therefore, financial institutions must be equipped with state-of-the-art banking software from back to front. It is especially critical to maintain a high level of service quality.

This competitive environment brings new challenges to banking software vendors: Their platforms must be able to deal with exploding complexity especially with regard to compliance. Clients expect a seamless digital customer journey and service quality must be 100% for 24/7. Additionally, FinTech companies offer now sleek and agile solutions that enable banks to provide easy-to-use client tools on top of their existing IT infrastructure and pose a threat to integrated software vendors. All this forces vendors to re-think their business and digital strategy and to consider huge investments to ensure long-term growth.

Yesterday, banking software vendor Avaloq announced Warburg Pincus as a new partner with about 35% shareholding in Avaloq. Warburg Pincus is an international private equity firm with headquarters in New York and strong expertise in the banking and financial services sector, amongst others. Warburg Pincus hold more than $10 billion of investments in more than 90 companies of these sectors around the world.

This global presence combined with their focus on growth investing makes them a good choice for Avaloq who aim at accelerating growth. Avaloq responds to the dynamics fueling continuous digitalization and growing competition in the financial sector, laying the foundation for defending and strengthening their role as one of the biggest players in the field. Thanks to the new partnership and Avaloq’s well-known aspire to innovate, it will be well worth keeping a close eye on them in the next years.

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Our new report on the millennial generation “Reaching Millennials - the Next Big Opportunity in Digital Wealth Management” reveals why wealth managers who rely on a “one-fits-it-all” strategy will inevitably fail to attract younger prospects. Millennials or members of Generation Y are born roughly between 1981 and 1997 and face a range of prejudices that are fueled by an increasing number of generalizing articles, studies and speeches that gain a lot of attention on social media.

The aim of our report is to show that it is no option to perceive millennials as a homogenous group that can be targeted with a uniform strategy solution. Hence, we conducted sixteen in-depth interviews with very different representatives of this generation to find out if there are common values and opinions. Analyzing the information shared in the interviews, we could group them together into five archetypes that show huge differences in their psychological traits, behavior, attitudes towards wealth and their communication preferences. Based on this, our report works out a comprehensive set of strategies that empowers wealth managers to survive the generational shift.

Why should “millennial strategies” differ from traditional ones?

Many wealth managers probably ask themselves why it should matter at all to think about targeted strategies for younger client segments. There are many reasons which are discussed in our report but the main aspects include:

- They are becoming the major target group. Millennials already outnumbered the huge generation of baby boomers and it is estimated that they will inherit trillions of dollars in the next decades as older generations pass on their wealth to them. This shows that today’s millennial generation is actually the client segment wealth managers need to focus on to ensure future success.

- Expectations are changing in many ways. Digitization, technological development, alternatives on the financial markets, transparency and sustainability, the diversification of communication – there are so many factors disruptively changing consumer needs and expectations across all industries and, thus, the perception of how good a financial service is.

- Financial interest and the importance of transparency raise the bar for wealth management services. Re-building the trust that got lost during the past decade is a challenging task and combined with an increasing demand for transparency and sustainability, the need for an open communication and information provision is rising. Additionally, our interviewees turned out to be interested in financial topics and seek to grow their knowledge – their wealth manager should respond to this interest, as well.

What is the current situation in wealth management?

Many wealth managers and private banks host regular events to which they invite their clients’ children and younger prospects. Some events aim at growing attendees’ financial knowledge. Others focus on family business succession. Whatever the case, most wealth managers lack a digital component that enables participants to access related material such as webinars or further information. However, we are convinced that wealth managers who put strong efforts in supporting young people’s first steps into building their wealth must think much broader than just meeting them and inviting them to interesting events. This is a great start but nothing more. We found six very different examples of wealth managers who excel at attracting millennial clients through a digital component. Our report presents them in detail and works out valuable learning points for their competitors.

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It’s no science fiction story, nor fake news: VR trading is possible!

Showing an excellent understanding of how to take their digital and client engagement strategy further and create unique experiences, the Swiss financial company Swissquote has recently released a new app that enables trading with virtual reality glasses. By using a VR headset, users are enabled to view the status of their accounts, check stock prices, currency pairs and key figures in a 360 -degree perspective, as well as to execute trades by focusing their eyes on the symbol. This creative approach facilitates a different client experience by enabling users to access information and trade in a highly dynamic way.

As already emphasized by our analysts, gamification will continue to play an important role especially in young consumers’ approach towards banking and trading. The demand for creative and convenient tools and features for mobile use will definitely continue to grow. Millennials, in particular, love it when viewing their portfolio on-the-way is made enjoyable using gamification techniques or when they can quickly track their spending or savings by means of visually engaging icons. Alternatively, customer engagements can also be maximized by introducing gamification elements like customization options in promoting products or displaying client information: it creates a personal experience and gives clients the feeling of being in control while also emphasizing you as an adopter of the latest tech trends.

With Swissquote setting the tone for innovative use of VR-based technology, it won’t be long until we’ll find ourselves in a VR-based setting discussing our retirement plans or investment scheme with an enjoyable chatbot (available round the clock).

The interesting storyline will be to see as many banks and financial companies embrace innovation and leverage the potential of both VR and AR-based technology, which can facilitate customers access to a new dimension giving the feeling of a virtual infinite space. A fresh perspective for (re-)building a distinct client relationship.

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(by Francis Groves, Senior Analyst)

A number of presenters at Finovate Europe 2017 gave ample demonstrations of the way in which chat and voice are fast becoming as impacting to wealth clients as the wealth manager or robo-advisory website. The first to attract our attention was the presentation of Munnypot, a new UK robo-advisory service using the Five Degrees ‘Matrix’ platform. Munnypot’s major innovation is to achieve the entire client acquisition, portfolio assignment and onboarding process via chat powered by AI. We were also very impressed with the co-browsing functionality from SaleMove with an excellent demonstration of how this can work in a wealth management context. With SaleMove, advisors can track clients’ use of their interface in real-time and AI is used to offer (naturally and sensitively) immediate assistance via live chat or video chat/call. We understand that major players in the U.S. are already making use of this and it’s easy to understand how the technology will be a great improvement on advice offered via the telephone and will improve advisor efficiency at the same time.

There were also two interesting presentations demonstrating the potential for AI at the stage of portfolio reporting and market updates, both of which were voice-based. Poland’s Comarch presented an interesting ‘conversation with your broker’ taking place while on the road. Myra, the virtual broker, not only gave you a portfolio update but suggested changes and took your instructions to execute them. In the case of AIXIGO, partner in Luxembourg robo, Investify, we were shown portfolio reporting being provided through Amazon’s Alexa.

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(By Francis Groves, Senior Analyst)

There was a strong consensus at yesterday’s Robo Investing conference that the future of automated investing is NOT standalone D2C robo-advisors. Breaking even as a go-it-alone robo is simply too much of a challenge for many to succeed; to be successful the robo approach needs to build on the advantage of established brands, though these are by no means certain to be just existing financial brands. Andrew Power of Deloittes made the point that a robo with average portfolios of £35K and charging 75 basis points would need AuM of £3 billion to break even.

What came across most strongly was the wealth of insights into what is need for automated interfaces to play their part in engaging new clients. Speakers made the point that the public need more education about their own need to make financial provision for themselves and the importance of switching from saving to investing if they are going to make their money work for them. However, as Rob Hudson of Aberdeen Asset Management said, institutions shouldn’t make education a main focus but, instead, should use ‘the power of easy’ and concentrate on putting financial products in front of customers.

Richard Theo of Wealthify suggested that simplicity (of design) could move mountains and that design really needed to concentrate on mobile delivery, gamification and the use of ‘nudge’ techniques. Anna Lane of the Wisdom Council also voiced concerns about simplicity and strongly recommended institutions leave out jargon and give absolute costs as well as percentages and basis points. The key learning points are to recognize that financial service users prefer automation to human interaction where it delivers what’s needed and that advisors need automation to improve efficiency and raise client:advisor ratios. Engagement is more than a good user interface and requires the creation of trust by means of the kind of preference and behavior analysis and anticipation of client needs that AI/machine learning can provide.

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One of the biggest trends in digital banking and wealth management in 2017 is personalization. As described in this article (source: Bank Innovation), consumers become increasingly accustomed to personalized digital services thanks to innovation-driving companies such as Netflix or Amazon. The core of this new level of service is to know your customers and to meet their individual needs.

Therefore, we highlight this area in detail in our new report on behind the log-in spaces of wealth management apps and secured online portals. Indeed, we found several good examples how wealth managers make use of the data resulting from their clients’ online and mobile usage to improve user experience, client satisfaction and security.

However, monitoring user behavior to detect suspicious actions is only where the journey starts – soon clients will expect no less than getting a truly contextual feeling when accessing their wealth management app. While the article mentioned above states that clients should have the opportunity to set off certain features they do not want to use, we think that online and mobile tools will be required do this automatically. Digital users will create their own digital finance tools not by changing the settings but by simply using them.

Our report sheds light on various areas of digital tools that benefit substantially from technologies like predictive analytics besides presenting the industry’s state-of-the-art client-only solutions and giving valuable recommendations for creating a winning user experience.

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Robo advisors launched by start-up companies were long perceived as a substantial threat to established players in the financial industry. But now established players are taking over the game. We are witnessing the launch of so-called hybrid-robo advisors by established players like Schwab and Morgan Stanley who have realized that embracing the technology and combining it with already existing assets like client base and experienced advisors will enable them to beat “pure” robo advisors in terms of the client experience.

In our opinion, those players who truly integrate technology in order to deliver better service will be the ones that stand out in the long run. Simply promising a human touch point in order to justify higher fees without a well thought out system in place to actually deliver this kind of service wont be enough.

Check out our new research on this topic.

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Artificial Intelligence (AI) and chatbots are a very big topic at the moment. Yet, there are a lot of uncertainties related to the emergence of this new mega-trend. Chatbots are software-based agents that can lead an intelligent conversation with users, sometimes based on AI, sometimes based on pre-defined responses. So basically you are chatting with a robot. This trend has already arrived in the financial services industry with FinTechs, Challenger Banks and also established players starting to jump on the bot wagon. These are very interesting times as bots are going to revolutionize the way companies will interact with their clients and we are now seeing the first real examples of bots being launched in the financial services industry. We can definintely say, that the bot trend is something that noone can ignore!

In our new report Chatbots for Banking and Wealth Management: Why financial institutions should emply virtual assistants we investigate the ways chatbots are already used in banking and wealth management and explore how they will revolutionize the future client interaction. For our assessments and recommendations, we screened more than 100 established banks and wealth managers to identify and analyzes the 35 most advanced and innovative chatbots and virtual assistants. In addition the report evaluates state-of-the-art chatbots by 9 FinTechs and challenger banks and as well the offerings of 8 bot developers.The report provides data driven answers to following key questions a financial institutions should ask when using bots of client interaction:

  • What does the current landscape for chatbots in financial services look like and what drives the developments?
  • Which are the most advanced chatbots in the financial services sector, how do they look and what do they offer?
  • How will bots change and enhance the client interaction and communication?
  • How to choose the right bot, platforms and implementation?
  • What do the vendors offer?


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The pioneer years of robo-advisors have come to the end and the market will separate the wheat from the chaff. Too many automated investment services target the same, growing - but still not sufficient - client segment to nurture all or most of them. Too few of the automated investment services see their platform through the eyes of a first time user, while many are losing sight of the need for sustaining a customer experience that will - ideally - last for years.

In our new report on the leading robe-advisors worldwide, MyPrivateBanking makes a series of recommendations on the basis of our benchmarking evaluation, among them:

Aiming for transparency is the best policy, especially when presenting the robo-advisor’s pricing and product and process information.

Automated investment platforms need to be subjected to rigorous user experience testing. Looking good is not enough - equally, content must be in-depth.

Robo-advisors risk side-lining themselves if they don’t recognize that clients need financial plans as well as investment portfolios. At least a basic financial planning offer should be considered for inclusion as part of the robo value proposition.

We foresee the need for leading institutions to be more radical and wholehearted in their automated investment initiatives in the next few years, even if this means starting over again with a second robo-advisor to replace their first.

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MyPrivateBanking Research has taken a comprehensive look at the performance of the overall leaders in digital wealth management across mobile, website and social media channels.   Our assessment in this report is both highly granular, based on the underlying benchmarks by channel, but also it considers the holistic aspects of how firms have put in place strategies for digital transformation, to offer a unique perspective. The results show that only 5 of the Top 25 global wealth managers by AUM make it into our shortlist of eleven digital leaders, and just over half feature in the ranking of Top 20 cross-channel performers. This is a disappointing performance for two reasons, one is that as a sector financial services is a forerunner of digitization (especially in terms of electronic payments), and then there is the fact the 25 largest global wealth managers are responsible for over $15 trillion USD of client assets, circa 80% of the industry. That is a large proportion of clients for whom their wealth management relationship is under-digitized and the pace of change is too slow.

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