Private View Blog: Covid-19 forcing private banks to finally embrace tech revolution

Covid-19 may turn out to be devastating, both in terms of the death toll and damage inflicted to the global economy, with stockmarkets seemingly set for prolonged and extraordinary free falls.

Yet, the coronavirus pandemic may have a silver lining in wealth management, as it may finally push private banks to jump start, or accelerate, their digital transformation, while providing plenty of business opportunities to fintech firms, software and tech providers.

Dragging feet

Although technology permeates almost every aspect of modern life, wealth managers have dragged their feet around digitalisation for too long, failing to keep up with other service industries.

All research studies show that high net worth individuals demand more digital interaction from wealth managers, to access portfolio information, execute transactions and obtain advice, yet private banks have been relying mostly on their relationship managers to serve clients, market their service offerings and grow revenues.

Legacy systems, security and risk concerns, as well as silo-driven KPIs, structured around maximising their current activities, have been often pointed to as key challenges. But these will fade against the fear of no longer being able to stay in business.

Today, with millions of people locked down in their homes, or in self-isolation, extreme measures are being imposed to contain the epidemic.

At a time when wealthy clients need their private bankers the most, to inform, guide and reassure them as much as is possible, the limited ability to meet face-to-face means many relationship managers are simply not able to do their jobs unless they are supported by digital channels. 

Head start

Those institutions that have invested in technology and have already developed a solid digital wealth management platform will emerge from this crisis much stronger than traditional, old school wealth managers. They will also probably see their client base swell, once the tsunami has passed.

DBS Bank in Singapore and Chinese banks, such as Industrial and China Merchants Bank, which have pumped assets and energy into upgrading their wealth tech systems in the past, report a huge spike in usage of their digital platforms since the start of the coronavirus outbreak. Private bankers rely on apps, video conferencing, audio and other digital channels to calm client fears and advise them. Moreover, clients are now learning, admittedly the hard way, to develop a do-it-yourself approach to carry out basic transactions themselves, freeing up private bankers’ time, which can be used more effectively for strategic discussions, for example around wealth and succession planning.

Seize opportunity

Wealth managers must see this global healthcare emergency as an opportunity to take a fresh look at their business models, review their digital offerings, address critical areas such as onboarding or client servicing, and strengthen their business continuity plans. These must include a robust work from home programme, to ensure the continuity of critical back and middle office operations, which are typically office bound.

They also must see digitalisation as a way to customise their offering and diversify their marketing and value proposition to appeal to a wider mix of clients, away from the typical rich old, white males, to include women and greater range of ethnicities and age groups.

While governments, particularly in Western economies, struggle to control the exponential growth of the virus, social distancing will become the norm for the next several months, perhaps until a vaccine is found. But attitudes to social distancing are likely going to take time to reverse, as the health crisis will scar us all.

Technology will hopefully help humanity to fight the war against this invisible enemy. And it is also the only means private bankers may have to liaise with their clients going forward. It could be a long time before wealthy individuals want to meet with their private bankers again and shake them by the hand. 

Elisa Trovato is deputy editor of Professional Wealth Management. Follow her on Twitter  @elisa_trovato 

Register now for free access to PWM, and sign up for our newsletter.