On Wednesday 23 March 2016, more than 200 professionals from the banking industry gathered at the European Conference Centre in Luxembourg-Kirchberg for the 7th edition of PrivateBanker.
This year's topic focused on the future of private banking with discussions around the disruptive effects of technology on wealth management, customer experience, the need for new business models, and new regulations leading to more transparency.
Serge Krancenblum, President of the Luxembourg Association of Family Offices (LFAO) and CEO of SGG, opened the day by stating that "the future is now", and then listed what are, according to him, the main challenges for the private banking industry, the first one being the necessity to deal with its legacy after the crisis it went through. Other challenges are the necessity to adapt to new regulations, and of course, structural changes. As a matter of fact, barriers are falling with new technology. "Banks and private banks need to be aware of the fact that the new generation was raised with technology. Therefore, technology will eventually replace schmoozing" added Mr. Krancenblum.
Disruptive technology to reinvent the economic model of banks
The first discussion panel was moderated by Joshua Franklin from Reuters. According to Claude Hirtzig, Senior VP Head of Private Banking, BCEE, and Marc Debois, Head of New Markets, ING Luxembourg Private Banking, the digitalisation of private banking won't be sudden, but is certainly coming as the generation is expecting it from their banks. Grzegorz Prososwicz, Head of Product Management for Comarch Capital Markets, highlighted the fact that "the situation is different in Europe than in Middle-East Asia, where Private Banking is far more digitalised". He also added that Virtual Reality advice would be the next step. Mourtaza Asad-Syed, founder & CEO of Yomoni, said that "it's more about innovation diffusion", meaning that Private Banking has to cope with the needs of the clients, and notably with mobile. He added "we need to use what already exists to actually disrupt and reinvent the economic model of banks".
On the question of client experience, Mr. Asad-Syed compared FinTech to Amazon and its online offers, meaning that if FinTechs could lay a hand on distribution and diffusion, they could have a competitive advantage over banks : "FinTech is the Amazon of Wealth Management". Claude Hirtzig insisted on the fact that private banks need to show their added value, which is only possible by knowing their clients and providing them with a personalised customer experience. Mr. Debois reassured the audience: "human relations are still extremely important for HNWIs who look for personal advice, a specific portfolio, and even to be recomforted in times of crisis… which cannot be achieved with standardisation". Yet, according to Grzegorz Prososwicz, the gap is closing between what HWNI wanted a few years ago and what they want now, as globally - not inEurope -, they tend to prefer digital contact with their advisors. But, the challenge is actually more cultural than anything else, according to Mr. Debois. ING has therefore appointed a Head of FinTech and a Chief Innovation Offier. A deep tranformation of the business is on the way. On the other hand, robo-advisors will have to play a big role, notably when it comes to client management and knowledge.
Mr. Prososwicz added: "digital opens new ways to interact and engage with the client. It also brings operational efficiency". The next steps? The use of social media to create a community and scan interests, but also an increase in video interaction. What also needs to be done, according to Mr. Hirtzig is educating Private Bankers with the use of the new digital tools. Marc Debois concluded by stating that technology was an opportunity for banks, who need to partner with FinTech companies.
