Winning new business amid social restrictions

Social restrictions and lockdowns imposed by the pandemic have expedited a much-needed move to digitalisation in private banking. Digital tools have enabled financial advisers to continue serving existing clients, but whether it has also allowed them to establish new client relationships is up for debate. 

Winning new business is critical to the health and longevity of a private bank, particularly at a time of increased competition. And digital capabilities are increasingly a key criterion in client’s selection of a new wealth manager, says Alex Birkin, EY wealth and asset management industry leader for Europe, the Middle East, India and Africa. Yet, the role of the private bank is still heavily restricted by in-person barriers to building new client relationships.

“For a long time, relationships have relied on human interface and, as a result, technology has been slow to evolve — and this will not change overnight,” says Mr Birkin. “But with the growth of new engaging digital tools and innovative prospecting techniques, such as social selling, the digital acquisition and onboarding of new clients is set to gain ground fast.”

Developing trust, a critical component in winning new clients, is proving more difficult in a digital environment. It requires more interactions and more time than in-person meetings. Moreover, with technology overriding much of the human relationship with potential clients, the risk is de-personalisation in the relationship. Tailored content, ideas and product solutions are based on trust and understanding a client’s current situation.

Need for new clients

Since the onset of the pandemic, just 40 per cent of wealth managers in Europe have been partly satisfied or not satisfied at all with ‘financial advisers prospecting for new clients’, according to a study from Aite Group. Similar levels of dissatisfaction refer to the ‘pace of onboarding’ and ‘new account opening’. 

So, how can technology help private bankers acquire new clients? 

“We see wealth managers going in a multitude of directions,” reports Alois Pirker, research director at Aite Group. “Working with marketing automation vendors, integrating social selling, and building out in-depth client/adviser data and analytics are becoming a critical area of expansion and point of differentiation,” he adds.

The issue, he says, is that these new techniques requires skilled advisers, but many of them are already on the tail-end of their career and may struggle with adopting these new digital tools. “Certainly, this shift will also be a catalyst for a generational change in the adviser ranks.”

Yet, pre-pandemic investments in technology have helped private banks to achieve brilliant results in growing their client base in these challenging times. 

“Private banking has historically been a people-driven business — the pandemic has not changed that. Although the inability to meet in person does make business development more challenging, our private banking teams are meeting with clients and prospects at unprecedented levels, virtually,” says Katy Knox, president of Bank of America Private Bank.

The US institution brought in nearly 2000 new relationships last year, with advisers and client benefiting from the bank’s more than $3bn annual spend on technology initiatives, reports Ms Knox. “Digital tools that enable advisers to identify, connect and engage with prospective clients have been instrumental in sustaining our growth strategy,” she says. “Our multi-year investments in enabling advisers to build a strong digital presence, such as through social media, LinkedIn and Sales Navigator, have paid dividends in the current environment.”  

Private banking clients also significantly increased the use of digital capabilities over the past year. “Over the past 12 months, we have seen adoption of digital capabilities rise to levels that would ordinarily have taken five years to reach,” Ms Knox adds.

Building bonds 

Among other initiatives, last year the bank launched a social media content creation platform, ‘Socialize,’ which leverages AI and natural language processing technologies to enable advisers to post “uniquely relevant content for clients and prospects, access insights and analytics to further optimise communications, and manage supervision at scale.” 

It also introduced a new weekly training series for advisers, aimed at sharing best practices on how to deepen client relationships and engage with new clients in a virtual setting. 

To continue developing its business during the pandemic, Chilean bank LarrainVial set itself clear goals, explains Gonzalo Córdova, partner and head of wealth management at the firm. First, it strengthened its self-service web tools and introduced suitability procedures to facilitate onboarding of new clients. Second, it introduced a digital portfolio offering and trained advisers on digital onboarding and advisory process, so that they could assist less tech-savvy clients. Finally, it kept close to customers through virtual meetings and events, which increased by 150 per cent in number and by more than a third in attendees. 

As a result, the bank met its 2020 growth targets for both existing and new clients. Of the 2000 new clients the bank added last year — an increase of almost 8 per cent — half were acquired digitally, with the other 50 per cent gained through referrals or traditional prospecting methodologies. 

“The option of digital onboarding gave us the opportunity to grow and incorporate customers from self-service segments, which broadens our client base,” explains Mr Córdova.

Making the most of the situation

Other institutions have found creative new ways for expanding their business books and tapping into new client needs. 

“When it comes to acquiring new clients, the core challenge remains the same: gaining trust,” explains Camilla Stowell, head of client coverage at UK bank Coutts, one of the oldest banks in the world. Achieving this via digital channels is “without question more difficult.”

Moreover, fewer word-of-mouth interactions means fewer recommendations and referrals. 

Yet, Coutts managed to welcome 1600 new connections, in line with its 2019 figures. “The new environment simply meant we had to focus on different ways to reach out to prospects,” says Ms Stowell. The focus was on building new connections through client referrals as well as the bank’s NatWest Group networks, the latter contributing to almost 20 per cent of new clients.

A factor that may have contributed to attracting new clients is the bank’s ability to reinvent client engagement. “In many ways, the lockdown presented the industry with the perfect opportunity to test new client entertainment and engagement ideas,” says Ms Stowell. Popular initiatives included the Coutts in Conversation series, featuring interviews with “high profile” clients and industry figures, webinars covering topics such as business, family and legacy, and events for clients’ children, as well as virtual wine tastings which raised “significant money” for charity, too.

The events have been so successful that 90 per cent of Coutts clients would like to attend more events in a similar fashion in the future, with 70 per cent also saying they would recommend the events to their peers too, reports Ms Stowell.  

Meeting clients and building relationships virtually, rather than in person, has presented new challenges during lockdown, but it has also brought unexpected benefits, states Katherine Waller, head of new sales delivery, RBC Wealth Management International. 

Since the start of the pandemic, advisers have been able to virtually meet clients and families relegated to their homes much more frequently than in normal times, when they are working and travelling all over the world. “We have found that conversations have become much more personal and with this comes deeper discovery of our clients’ needs, value and priorities, as well as our ability to provide insight and to constructively challenge.”

Moreover, spending more time at home has pushed many clients to share wealth-planning decisions with their partners too. “In many conversations, we find that clients either want to have their spouse present, or at least to state their spouse’s priorities and objectives as equally important in decision making,” adds Ms Waller. Before the pandemic, it was harder to get a time for both spouses to be present. This new, more inclusive approach is likely to continue as restrictions are eased and ‘normality’ returns, she believes.                                    

Client conversations have become more transparent and decision making faster, which has opening opportunities for advisers to help clients further and identify referrals for new business. “This period has also shown the importance of being authentic and allowing our vulnerabilities to show when on video,” she adds, explaining that during a meeting, a delivery, home schooling question or the phone ringing has become the norm. “Going forward, relationships will likely be more personal, better understood and much more tolerant.”

Taking the time to build trust

At JP Morgan Private Bank, clients continued to entrust private bankers with more assets, which is testament to “the team’s remarkable resilience and tenacity,” reports Annabelle Azoulay, head of JP Morgan Private Bank in France.

“Knowing a client and their family’s needs is of upmost importance, particularly in times of crisis. Our being able to anticipate their needs and provide advice and counsel in advance has been critical.” 

Covid-19 has placed an extreme burden on entrepreneurs, a key client segment for the private bank, as it has created an even more pronounced mismatch between reduced revenue streams and ongoing operating expenses. Helping clients identify ways to extend their available liquidity has been highly valued, explains Ms Azoulay. 

The bank’s strong focus on cybersecurity was critical during the pandemic, as both phishing attacks and financial consequences of ransomware have significantly risen over the past year. Also, working remotely can pose unique challenges to a secure work environment and leave it vulnerable to a breach or loss of company or client data. 

“While we continually invest in our defences, we also help clients identify potentially fraudulent transactions. More importantly, we help educate them on how they can better protect themselves, their families and assets.”

Fideuram Intesa Sanpaolo Private Banking reported a “strong increase of new clients”, and gathered more than €8bn in net new money in the first nine months last year, which pushed its assets under management to a historical record of €243.8bn. “The ability to attract new clients is a key indicator, and a good measure, of our client service quality and response to markets,” says Tommaso Corcos, chief executive of Fideuram-Intesa Sanpaolo Private Banking. 

While acquiring new clients is key, taking care of existing customers remains a priority, he adds. During the crisis, client satisfaction has translated into greater share of wallet for the Italian bank and more referrals, which remain the main channel for gaining new customers.

“The combination of public digital platforms, our proprietary digital platform and, above all, a new way of working and interacting with clients has allowed us to offer an even more timely and personalised service, based on client needs,” says Mr Corcos.

UBS, the world’s largest wealth manager with more than $3tn in client assets, has also seen strong year-on-year momentum, with $43bn in net new money. The Covid-19 pandemic has reinforced the value of personalised advice, with 76 per cent of UBS clients seeking more contact with their advisers to navigate the market environment and adapting much faster to technology. 

In 2020, the bank introduced ‘UBS MyWay,’ an app allowing clients to build their own portfolio together with their client adviser. The bank’s ‘UBS Welcome’ app, which allows remote client identification from more than 60 cross-border markets, has widely supported advisers throughout the pandemic, while live streaming has taken the bank by the storm. The bank recorded 100,000 live viewers for its recent Great China conference, with several thousand clients regularly tuning in to hear the latest views from its CIO.

“We stood for stability, maintained connectivity and provided the advice and solutions our clients needed. And in turn, clients trusted us with their business,” says Ralph Hamers, group chief executive at UBS.

Indeed, private banks show their real value as a wealth manager and trusted adviser at times in life when clients need them most. 

“True winners will be firms that embrace and invest in technology, while still preserving the high-touch side of client relationships,” says Bank of America’s Ms Knox.