During 2008-2009, private banks had to postpone their investments in front office systems because of cost cutting measures, but this year they have started to reinvest massively and quickly and are keen to implement and deploy this technology, according to Thibaut Jacquet-Lagrèze, marketing director at Odyssey Financial Technologies.
One of private banks’ main goals during the crisis was to increase the time private bankers spent with their clients. “The banks’ top priority was to retain clients as these had lost a lot of money, as the value of their assets had decreased and there was a lot of mistrust,” believes Mr Jacquet-Lagrèze.
“Private bankers’ time was spent with clients to explain how their investments were structured, the risk they were taking and what the underlying assets of their products were,” he explains.
A front office system which integrates portfolio management system with CRM (customer relationship management) capabilities, claims Odyssey, can provide the client with all necessary information about assets, including not just their market value but also their associated risk.
Platforms should also include an advisory tool, allowing the relationship manager to structure an interview, starting from understanding client needs and reviewing their asset allocation, says Mr Jacquet-Lagrèze. Futuristic systems can now also trigger proposals for new investments in case there is a need to change the risk level or change the strategy.
“With this kind of software, the relationship manager can log in into the front office system to show to the client the status of his investments, do some simulations of the investments or investment proposals,” he adds.
The type of technology now used by leading private banks allows instant recalculation of portfolio risk, based on real time market value of different assets, and realignment of client needs and preferences. Warning alerts are also triggered to the relationship manager if clients deviate from their original risk profiles and investments, reminding the private banker to re-shape the portfolio. Control of compliance functions can also be automated, so unsuitable products can be excluded.
“The idea is to have one tool to guide the private banker through the advisory process, because what private banks are lacking today is not the back office system but the front office system,” says Mr Jacquet-Lagrèze.
What differentiates the latest generation of front office systems from a standard CRM tool is their ability to provide a complete integration between the front office and the back office. These new platforms can generate automatically the orders and send them to the market to make the investment changes in clients’ portfolios.
“Private bankers are spending a lot of time on administrative tasks or tasks related to the back office. This kind of technology can reduce this time to nearly zero so they can really focus on their clients. Private banks can sustain their growth with the same number of people, because their productivity will increase, so they won’t need to hire more people to spend more time with their clients.”
Investing in technology
UniCredit Private Banking is heavily investing in technology to improve its advisory process. This is part of the implementation of its European service model, which aims to harmonise the advisory service, product development and investment strategies of national private banking entities in Central and Eastern Europe, gained through acquisitions in the past few years, with Germany, Austria, and Poland, being the core markets.
The bank has recently introduced to Italy Triple ‘A’ Plus, the front- and middle-office wealth management platform by Odyssey Financial Technologies. The platform, which has been employed in the private bank in Germany for the past few years, will be rolled over to Austria next year too.
“Triple A will be our integrated platform in Europe,” says Andrea Maffezzoni, CFO at UniCredit Private Banking. “Technology is an enabler for us. The core of our private banking service model is the advisory process. This is where we can build the competitive advantage by first understanding the clients’ needs and then secondly providing answers to fulfil such needs.”
In Italy, private bankers until now were supported by proprietary software. The implementation of this new platform will have two main advantages, he says.
“First of all, the platform is more advanced and more sophisticated than the previous software, it allows us to have a global view of the client portfolios and better reporting. Also, having the same platform in Europe will allow us to have economies of scale in the development of this platform which will help us provide better service to clients.”
Cross border improvements
For example, while implementing this platform in Italy, new functionalities were added. “Different countries sometimes have different needs and you can cross fertilise all the national experiences. Having the same platform is an advantage because you can roll over the same kind of improvements in all countries,” says Mr Maffezzoni.
