Philipp Rickenbacher, appointed chief executive of the Zurich-based Julius Baer Group in July 2019, has been busy facing several key challenges.
Firstly he has had to mastermind a technology revolution to negotiate the Covid-19 pandemic, in a bank with a traditional view of relationship management. Secondly, he has turned his attention to redefining the relevance of Swiss private banking, in a post-secrecy world. And thirdly, he has been required to put his own stamp on an institution, closely associated with his colourful, highly acquisitive predecessor, Boris Collardi.
Time for tech
Technology, believes Mr Rickenbacher, adds value to both clients and shareholders. “More often than not, the technology has allowed us to gain market share, conduct more transactions and widen the scope of what we do, with the same amount of people, but also with people of a different profile,” he says.
Observers say Mr Rickenbacher embraced technology throughout the firm, well beyond the narrow client interface, replacing front or middle office stalwarts with younger, tech-savvy operators.
“Some traditional private bankers are still with us. But they have had to re-invent themselves many times over the last decade, learning about new tools, products and solutions,” says Mr Rickenbacher, with employees coming from a technology background now accounting for 30 per cent of his staff.
He acknowledges the tech transformation is still in its earliest stage, yet to embrace the effective deployment and analysis of the data mountain, which Julius Baer routinely adds to. “The data topic has been top of my agenda since my first week as CEO,” he admits. “We have been using data analysis and AI now for a number of years to identify potential losses in client assets, for example…and similarly, to detect potential for additional net new monies we might be tapping.”
Achievements have been substantial, cost effective and yet still experimental, in an industry which made a virtue of secrecy for much of the 20th century, when gathering data was an anathema to most private banks. The turn of the millennium, suggests Mr Rickenbacher, saw a new phase of “security through fragmentation”, during which data was typically compartmentalised and dispersed through unconnected IT systems.
The latest challenge for CEOs, he says, is the expensive, high-maintenance task of combining these disparate sources into a powerful data hub. “Transaction and client data brought together requires a massive amount of common infrastructure to be built, of data normalisation,” says Mr Rickenbacher, reporting that this intensive work has been in “full swing” at Julius Baer for some time.
This technological overhaul, the way he sees it, forms part of a broader, long-term restructuring of Swiss private banking, which is increasingly taking on a geopolitical dimension, as rival jurisdictions now see financial services as a highly effective soft power weapon.
Transformation
The first re-invention, he says, happened five years ago, following sustained anti-secrecy pressure from the US, including billions paid out by leading players in regulatory settlements.
“There has been much negative talk about Swiss banking due to nation-by-nation political competition and rivalry in regulatory frameworks,” says Mr Rickenbacher. “But many have underestimated the transformation beneath the surface of Swiss banking, which remains one of the world’s most powerful wealth management models and will always attract criticism from competitors.”
The Julius Baer story can be seen as a microcosm of this broader canvas. He describes how the Swiss private bank was the first to publicly list in the 1980s, heralding a new era of transparency before relinquishing family control and embarking on a series of major international consolidations in the 21st century, under the stewardship of the youthful Mr Collardi.
“At this time, we moved, almost silently, from a brokerage and custody model to a holistic advice offering with a huge breadth and depth of services,” says Mr Rickenbacher. “People still look at our nineteenth century walls on Bahnhofstrasse, that have been built for eternity, and don’t quite appreciate what has been happening within those walls.”
This realignment has represented both an opportunity and a challenge, he says, with Covid increasingly focusing the need for “fundamental changes” in the latest era. “We are coming from a decade of growth and expanding our footprint,” he says, talking about Julius Baer’s breakneck expansion from 2010 onwards.
“Before that, we were a small, family-owned private bank, and then came the acquisitions from UBS and Merrill, plus organic growth, and we have grown today to $470bn and counting.”
Mr Rickenbacker, who worked on the UBS integration, still pinches himself when referring to this “quite amazing” decade.
“This has given us the critical mass and footholds in growth markets like Asia, but also created stronger positions in more mature markets such as Germany and the UK, from which we can build.”
He speaks about an inevitability, that the freewheeling wealth management glory days had to come to an eventual end, because such fast, unprecedented growth of new money in no way guaranteed long-term profitability. Indeed, those who know him well say Mr Rickenbacher has already set the tone to accelerate Julius Baer’s critical transformation after the previous phase of untamed growth.
This can only be achieved, he suggests, by managing client assets with greater skill, intensity and more regular contact. One of Mr Rickenbacher’s key aims in this realm is to expand the universe of investible assets, with alternatives ready to gain much more exposure in client portfolios.
Investment expertise
Baer watchers say it is vital for him to make such bold decisions around the mechanisms of investment, in order to fully realise the bank’s potential as a wealth manager, ahead of some well-resourced rivals.
“I think private markets, particularly equity, will play an even bigger role in the next few years,” he confirms. “I also expect a renaissance of hedge funds, which are now losing some of the negative image they gained during the financial crisis. There is a vast influx of new talent and opportunities in this space.”
But the biggest question which currently occupies Mr Rickenbacher relates to the future of digital assets and tokenisation. “When I look at what is happening on the investment side, the need for us to enhance our scope in concentric circles around our core is today greater than ever before,” he says.
“With crypto and digital assets we already have to think what will happen in the next 10 years. What I am sure about is that wealth management has to re-invent itself at a much faster pace today to enhance its scope and to stay even more relevant to clients.”
As the conductor of this grand transformation, “Philipp Rickenbacher represents a new generation of global wealth leaders combining a much broader professional and educational background with distinct industry experience,” says Matthias Schulthess, managing partner of financial services recruitment firm Schulthess, Zimmermann & Jauch.
“The opportunity he faces is an unprecedented one, to shape the pure play private banking proposition and define a new global industry standard,”he adds.
Philipp Rickenbacher was named Best leader in private banking and Julius Baer named Best private bank in the Middle East in PWM’s Global Private Banking Awards 2021. Visit our microsite for extended coverage of the awards
