Julius Baer embraces digitalisation and data to transform client experience
Julius Baer, one of the most traditional, globally-focused Swiss private banks, is fast moving from old school ways of doing business into a complex digital ecosystem, far from the comfort zone of most wealth managers.
Along with competitors, the Zurich firm, which oversees SFr392bn ($415bn) globally, has long been battling the treble headwinds of increasing client expectations, continuing battles with legacy wealth management systems and the increasingly complex technical specifications needed to meet regulatory requirements.
Now the existing, long-term pressure on wealth managers is being exacerbated by the Covid-19 pandemic, which has poured “petrol” on the fire, admits David Durlacher, CEO of the bank’s London-headquartered subsidiary, Julius Baer International, with branches across the UK and Channel Islands.
He is no stranger to the fragility of private banking, joining in 2013 as part of the acquisition of Merrill Lynch’s international business. “Coronavirus has thrown into pretty stark relief those firms capable of adapting and demonstrating maturity and those that are left behind,” he says. “And there will be many left behind.”
Times they are a'changing
Julius Baer has tried to move with changing times by introducing a digital investment advisory suite (DiAS), to help anticipate market changes. This platform was introduced in Julius Baer’s home territory of Switzerland in 2019, before being rolled out in the UK and the Middle East. While DiAS aims to streamline advisory services, with the help of “some of the best technology that is available in the world”, Mr Durlacher admits the industry’s recent efforts to intensify communication between bankers and clients have not generally proved fruitful.
“It is an unfortunate reality of the last two decades in particular that the amount of time relationship managers have to spend in front of clients has not increased,” he says. “That is often due to the complexity of internal programmes and legacy systems and under-investment.”
It is vital, says Mr Durlacher, that relationship managers are furnished with advanced tools to transform the client experience, allowing private banks to demonstrate service levels are materially improving. This includes “faster delivery of investment advice, a far richer level of information on their holdings and analysis of the impacts of potential trades”.
Since the start of the pandemic, clients have demanded more regular contact with relationship managers. “We have seen a material increase in the advice we have provided to clients in these times of market volatility,” he says.
“For some of these investors, this is the first time they have experienced really deep investment and market dislocation. So they have needed people to interpret market conditions in order to find how to best position themselves, either defensively, or to take advantage potentially of the upside.”
Detailed conversations, enabled by digital support, have centred on portfolio risk analytics, particularly concerning how market movements change the value and positioning of various holdings. Feeding in data from research also allows advisers to communicate thinking around longer-term investment themes, rather than just concentrating on short-term switches and transactions.
Slimmed down?
Many private bank watchers believe digitalisation to be part of a cost reduction drive. Julius Baer saw 300 – out of a total of 6,640 jobs – axed by the bank in February. But for Mr Durlacher, it is more about helping the bank to interact with clients. “Digitalisation is nothing to do with tech replacing people. It is all about holding the client at the forefront,” using data to improve advice and investment management returns.
He also denies Julius Baer is reshaping its model to focus predominantly on millennial clients. “Digitalisation is nothing to do with millennials, it benefits every client. It enables us to be flexible in how we communicate with them and how they access information and are able to use it and how we can speed up our systems…how we use AI and big data to anticipate trends, so we are able to see patterns emerge even before our clients see them.”
This focus on data will be the centre of a very different post-crisis private banking model, he believes, allowing advisers to spend much more time with clients in a commercially viable, efficient operation.
“The days of oak-panelled dining rooms and silver candelabra are numbered,” believes Mr Durlacher, adding that this change in mood and expectations will be no short-term blip.
“Once coronavirus leaves us, there will be new ways of working and interacting,” he says, dismissing any notion of relationship managers being disempowered. “Wealth managers will have to remain on the front foot in how they interact with clients and meet them if they are to keep up with changes in the dynamic.”
