The Covid-19 pandemic has created a new dynamic in the relationships between technology and outsourcing firms in one camp, and the private banks they typically target in the other, believes Steve Meyer, global head of wealth management services at SEI.
The setting up of “online communities” has facilitated much more frequent contact between the two sides, while also allowing European wealth managers to share their experiences. This momentum triggered seven new client relationships for SEI during the height of the outbreak in 2020, with the lion’s share of deals sealed “from start-to finish completely remotely”.
New clients included London-based portfolio manager Connor Broadley and the Houston, Texas-based Legacy Trust Company. Central to these client discussions has been concern about Covid’s effect on banks’ growth agendas, with some more narrowly-focused firms experiencing “an awakening”.
“Many wealth managers were focused only on the end client,” explains Mr Meyer, speaking from SEI’s US headquarters in Oaks, Pennsylvania. “But they learned from us that they need to be closer to their workforce too, equipped with the right tools for collaborations.”
Mental anguish and separation from HQ have proved particular problems for relationship managers at these firms, their bosses often overestimating the change to organisational cultures which Covid has stimulated.
Post-pandemic private banking must, in particular, embrace these personal, collaborative elements in addition to automation. “Digitalisation or technology is not the solution, it’s the enabler,” he stresses. “People who believe the personal side can be taken out of financial culture are making a major mis-step,” although they can no longer ignore the need for change.
Landing and expanding
One key priority is enhancing existing relationships, particularly with large organisations. Currently, SEI is in the middle of implementing a deal, providing a “full technology platform” for the private banking arm of HSBC. Previously, SEI had provided HSBC with asset management products.
“We are very good at landing and expanding,” says a smiling Mr Meyer, targeting wealth mangers in transition, trying to re-establish themselves in key markets. “Many have legacy models onto which they have bolted on outside technology and they have a Rubik’s Cube of a technology platform. For them to grow the scale of their wealth management practice, it’s very difficult with the technology footprint they currently have.”
The transformation of private banking over the last two decades from an ecosystem focused on secrecy and tax minimisation to an asset management-led model has also played into the hands of technology firms, he believes. “They never built their technology footprint or infrastructure, to really drive pure wealth management, and now that’s what they have to do. Previously they bolted their technology together. Now they are looking for a single platform, for their global operation, which they can scale across their business.”
Some of the larger banks currently have six or seven different technology platforms operating across different regions, but struggle to “tie it all together into a single wealth management practice”, with a “huge disparity” existing between rival European players, some of which are only in the “very early stages” of their digital journeys.
Seeking inspiration
In order to make faster progress, they must look for inspiration from other spheres, says Mr Meyer, citing food delivery apps, which have created “a personalised, on-demand expectation”, now permeating into financial services.
“There is a higher bar than ever before. End clients want more access to data and information, more personalisation and technology is the key to enabling that.”
The big techs, including Alibaba, Facebook and Google, will have a huge influence on the development of wealth management he believes. “It’s inevitable that they will move into this sector. The really smart people — and we count ourselves among that number — will not resist this trend, they will embrace it and partner with these firms. Think about the reach they have. If you are going to fight that, then you are not going to be successful. There is always a strong alliance you can form that can help your business.”
