Digitalising private banking – proceed with caution

Private banking clients are historically tied to tradition and very discrete when it comes to online engagement and privacy issues. However different their profile might be from clients served by retail banks, the demand for technological tools and innovation is spreading among the wealthiest too, writes Valentina Romeo

Private banking clients are historically tied to tradition and very discrete when it comes to online engagement and privacy issues. However different their profile might be from clients served by retail banks, the demand for technological tools and innovation is spreading among the wealthiest too, writes Valentina Romeo

In the last ten years, clients demand for digitalisation in private banking has soared, despite many big and small players say the contact with relationship managers for this class of clients is still vital.

The new generation of wealthy entrepreneurs is very active on the web and, as the young online-only investment and wealth management firm Nutmeg has showed, results can be surprising.

The technology savvy CEO of the firm told me he doesn’t understand why private banks or other wealth management firms aren’t all fully active on the web yet. He was resolute and very confident saying his firm is a pioneer in the UK, choosing a business model that is now very popular in the US- he studied in the Silicon Valley. In just two years from its start, Nutmeg has attracted more than 97% of its clientele just by words-of-mouth. This says a lot about the high level of trust the firm is inspiring -not to mention the hard work of marketing team of course.

Anyway, the question is how far a private bank can go with their online service? Or, will there be the risk of them becoming too similar to a retail bank service?

In a recent briefing I attended on the subject, these were the main topics raised in the conversation. Though nothing controversial came up, the response to digital from wealthy clients seems to be various, and, in some cases, surprisingly negative. According to some of the biggest names in the industry, many high net worth individuals don’t actually ‘beg’ for digital solutions. The issue surrounding their involvement into digital is mainly about their screen time and screen space challenges. Also, they don’t really ask for social media. Some of them have never sent a tweet, neither the CEOs, nor the client.

A big part of banks’ digital strategy is still under development though, and many private bankers are still unsure about what approach to use. They are conscious they need to act very wisely.

It might seem an ‘unexplored field’ in private banking, but in 2013 only many banks have successfully renewed their digital offer.
Current best private bank in the UK, Coutts, upgraded its technology rationalising 27 operating systems down to one core system, wiring up the whole bank coherently and enabling increasing digital contact with clients. The bank has also just launched enhancements to its mobile service, which now provides clients with access to their investment portfolios, in addition to banking services. On the platforms, clients can undertake a trade or change their investments mix.

La Caixa Bank has recently upgraded its front-end across the retail and wealth management segments. The bank’s ‘my manager’ front-end allows for a self planner and iPad app plus a better range of data and research. The client should be able to go online, fact find, set profiles and assess risk attitude, portfolio goals, affordability, scenario planning and the like. The website is also customisable and allows clients not only to interact with advisors via video calls and interactive chats, but also to e-sign documents.

ABN AMRO has just launched a new online wealth application, which is being tested in Singapore and will be rolled out in all markets later in March this year. The app, Online Wealth, is a portfolio management tool that allows clients and their relationship managers to check every aspect of their wealth portfolios performance by viewing the details on a tablet or laptop.

Also this year, Citibank is launching InView, now in its beta version. The Citigold group, specific for private clients, is also launching a new totally integrated platform called Rainbow. ABN AMRO and DBS are also experimenting new digital platforms also using online videos.

It is very important for these institutions to understand the group’s values, apart from being constantly updated on the latest technologies and services. Only in this way they can develop the right digital culture and behaviour.