“IT in banking is nothing new and is a bit overhyped,” said Haupt, speaking at a panel discussion at the Annual Wealth Management and Private Banking Asia 2017 event last week.
“E-banking tools started in the early 2000s, then we had the first wave of robo-advisors in the US in 2008. After ten years, we see their reach to customers, in terms of market share, is very limited.”
Fintech is likely to have a bigger impact in other areas of banking than the wealth management business, such as electronic payments and in retail banking, he said.
“One reason is regulations, which seem to be stable and stick to old [wealth management] business models: face-to-face interaction, and solid advice from the [human] advisers.”
However, Haupt sees private banking facing challenges as new robo-adviser features become commonplace. For example, fee pressure due to the lower and transparent fees of robo-advisers.
“We have to adjust our fee structure and the industry is slowly losing marketshare to the new players because not all clients need a full spectrum of wealth management services.”
Targeting inefficiency
LGT Asia’s head of IT, Markus Weidmann, who spoke on the same panel, said certain inefficient areas of the wealth management process will benefit from fintech adoption.
“It’s mainly on the client onboarding and compliance side where we think it’s [currently] not very efficient, especially in Hong Kong and Singapore as there are strong regulators. That’s where we are looking and plan to invest more in IT.”
Weidmann added that some regulatory areas in Asia are stricter than those in Switzerland or Europe.
“We are trying to help the relationship managers so they do not have to struggle with what kind of documents or due diligence they need. For this part we are trying to bring in some start-up companies to design the advisory process [to combine] the compliance and our firm’s house view on one product.”
Weidmann forecast that in the long run, artificial intelligence may help in terms of reading documents and automating the know-your-customer (KYC) process.
“Big data might be more interesting for retail banking. It’s about gathering the data in-house and trying to get new insights, for example, for one client, based on his transactions, how he is likely to invest money in the next six months.”
Haupt added AI would help better understand how a particular investment, for example a stock, would impact the whole portfolio.
Tech reluctance
Face-to-face meetings are unlikely to be impacted at LGT, Weidmann believes. He said the majority of the bank’s clients are aged 60 or above. “They have difficulties keeping up with the technological developments. They still want to talk to a person on the phone, but not a robot and not through the [online] chatbox.”
Even the younger generation, aged 30-plus, have frustrations when trying to use the bank’s online platforms, he added. They mix up passwords for downloading the app that allows logging into the e-banking platform.
“When rolling out a new e-banking platform in Asia, you wouldn’t believe how many clients called the helpdesk and said: I cannot download the app because the password does not work. It’s these simple technical hurdles that keep clients from using the [tech] solutions.”
Fintech applications may be more suitable for the next generation who are still kids today, Weidmann noted.
“There won’t be a fintech wave to shake-up private banking in the next five years tremendously, and for the longer term we still have time to adapt.”
