In an eight-page special Private Banker International sits down with 11 senior executives to host a hard-hitting debate surrounding multiple channels, devices and social media choices increasingly becoming available
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| Michael Reed, Head of international privateclients RBC |
| Hamish Sinclair, Director, Stonehage |
| Veronique Ummels, VP strategy&development, ABN AMRO |
| Christian Hvamstad, Principal, SEB Private Banking |
| Kate Griffiths-Lambeth, ED, Stonehage |
| Paul Jennings, Commercial chief of staff, SG Hambros |
| Tom Jones, Smith and Williamson |
| Nicholas Lambert, Partner, Sarasin |
| Chris Albert, Head of UK wealth planning, Canaccord Genuity WM |
| Jeremy Marshall, CEO, C Hoare&Co |
| Jon Howe, MD, Santander UK |
| Pierre Bouquieaux, Temenos |
| Gavin Tingle, Temenos |
John Evans, Editor-at-large, Private Banker International: Privacy is key to clients. How far along do we go on open systems as a part of the client touch point? What channels are witnessing the most usage, mobile or online?
Jennings
I think it is a balance among various issues at the moment. We monitor quite extensively internal emails and accounts and we control if there are any issues on privacy. It is all in maintaining that sort of client confidentiality and how you develop the entire brand.
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By GlobalDataHvamstad
I think it is all about customer attitude. 50% of our clients really want to be online. At the same time, part of the same clients want to keep their privacy. We had to have a soft approach to get them into that space, so that clients can hear most of the updates from the CEO and private banking side and so forth. So it is very hard for technology as well because you hear of all these new hacking scandals coming out all the time. So how much do you actually want to put into that digital sphere?
Ummels
What we found is also an age involvement. Recently the discussion is how to involve the group called generation next. I think that within two-three years we are going to see not so much the online, but more mobile. And that causes a big challenge because of the future clients. Because for the current clients we experience the same, but for the future we’d need to be more involved. Clients used to be more sceptical, but now they are more adapted to mobile as it is easier to understand than online.
Reed
What does mobile mean? Generally you can access everything you would normally access through an app. I don’t see there’s any more interaction, actually maybe less interaction, than going through the website. So, really we just need to optimize what we have. At RBC we do have some really great cross boarder take solutions. But for private banking, frankly, it is not a retail channel, so people don’t want to see their deep transactions. They want to see the overall picture. If we can provide that, I think that’s the key.
Jones
Some people create apps just for the sake of it. I think it is more important to create a website that has the information that the person can access while on the go. I think that is quite a key point.
Lambert
Because of the suitability work that has being going on in the asset investment world in the last 4-5 years, we asked clients questions about what kind of assets they have. The demand of clients has fundamentally changed. People are becoming more interested in what their personal balance sheet is, but as Michael said, they are less interested in the details. People who inherit money are actually less interested [in digital]. A major competitor last year did a client survey with an amazing high return from a very private discrete client base. What we found is that people are becoming more interested in looking at their overall balance sheet (how it looks like) rather than the details.
Albert
We recently found, in one of our client satisfaction surveys, that 70% of our clients are currently actively using some form of screen, mobile screens or tablets etc. 85% of that 70% had the requirement to be able go online and see what’s going on. For us it was very interesting statistics. We’re in the process of rolling out our digital platform for our clients. Something that we need to be concerned about is not so much the content that we put in front of our clients, we are concerned that we are going to end up fighting for screen time and screen space with our clients. With busy clients who are accessing their banking apps, what time are they going to have in their busy days to actually go and access what we offer? And when they do want to do that, what do they want to see? They don’t want to see the snapshot; they don’t want to see in-depth analysis. So this is something we are seriously looking at, because we can spend a huge amount of money on running our digital platform.
Marshall
Our focus is very very personal. We only have about 7000 clients in total. The reasons why clients come to us is for personal connection, but they want technology as well. One thing I see is that each new channel doesn’t kill the old one, but adds your cost space at each one as additional not ‘instead of’. Apart from person to person, we are doing really great with online, which is at a high level of usage. We are dabbling in apps and mobile, but we are also waiting to see what others are doing in terms of digital strategy. What we actually haven’t done at all is social media. We recently did a market research around that and we got absolutely no interest from our clients, they have no interest in social media. They are more interested in mobile or online, but not in social media.
Mark Foxwell, Editor, Private Banker International: Are you seeing any demand from clients for social media? How secure is the information?
Hvamstad
I haven’t met any clients who were really talking about the social media space. On the privacy side, we work with a lot of social media entrepreneurs: we have a client base in Finland, Sweden, and so forth, so some of the front office is involved. None of those clients are asking about apps or social media. They want time with the bankers. Private banking is about service, it is not about the product itself. It is about using products for a good cause, and understanding your clients better than retail. Products and service is important in private banking and having a presence in social media I think is fine, but I don’t think this is a solution to grow your customer base.
Ummels
Social media for a private bank is like a business card. So, having looked at what is the best social media tool for us, I would say its LinkedIn. It is private, but at least you can advise them on making sure they see that you have a professional profile. Also, we have found some research that if you look out for the name of a private banker, people often use google, but usually younger people use twitter and google + as search engines.
Marshall
I think the reason our clients don’t really use social media that much is about time. On the research side, people say they would really love to have a mobile app and use it to search. We specifically asked in our research, do you want Twitter or Facebook? And the answer was no. Our clients are very low profile and they prefer to remain unknown. On the age side, especially for transactions, the use of internet is very strong as you’d expect among the younger age. Then it kind of drops off in between kind of 40 and 60 and then it picks up again. So actually there’s a kind of a hole in the middle, and I think this deals with people that are typically entrepreneurs or running businesses.
Albert
If you got a 60-year-old person running a business and addressing a 15-year-old client and you talk to them about connecting through Twitter, you are not going to get automatic disconnect? Are we not creating a disconnection from us and the people we want to engage with? Are we trying to engage the next generation? And if so, do we have the right tools to get them? But if we interact with people of our own age demographic maybe we have to interact with them in a slightly different format? So it is all about strategy, how am I going to use social media?
Howe
The world moves so quickly and so does technology, so you can’t build a technology strategy. Years ago I didn’t know what Twitter was and when it started, so it’s best to adopt a flexible strategy to say some of our clients. About that hole in the middle, the work that we have done suggests that for many people, retiring hasn’t been that great. I think that technology enables people to play a much more active role in managing their wealth themselves. And then it becomes their job, it is what they do in the morning, is playing an active role managing their portfolio themselves. My suspicion is that this will increase.
Jones
As computers develop so will social media and there’ll be more and more business subscription. Clients want services and it doesn’t matter which platform is being used.
Evans: So how do we serve the next generation, adhere to their points of need?
Reed
I don’t think we can underestimate how much value there is in advice experience that you’ll never get out of a computer. The gateway to get that, what we offer for the next generation I think is going to be the same as what we offer to this generation, because I don’t think a computer will be able to give you tax advice for instance.
Sinclair
I think that’s a very important point, but I think it is how you engage with your client and a generation who starts to speak social and how your brand is positioned in that context, that is what requires a lot of thought.
Albert
I think you can get really hung up on how you actually deliver that message to your clients. What I am trying to create within my business is to meet clients at their point of need and if we take that motto and apply it to our social media strategy, then we don’t have to get too hung up on what the big picture is that we have to deliver to our client base. Because we have different touch points across our different client demographics we can probably have a lot more measurable manners to deliver what we have to deliver to clients at their point of needs, so we are dealing with younger generations, we need to deliver on a platform that is acceptable to them. But nothing is going to replace the human contact, and knowledge that we have to deliver that message. For the type of business that we are, I don’t think clients want something outside of that. I think they appreciate the personal touch. The point is, how do we engage with those clients? It has to be around their point of need.
Hvamstad
Using social media to get information about clients like their habits is attractive. I think you have to show up and be better than a private bank. I think it could be dangerous to use technology and appear like you are a retail bank.
Lambert
It is not a danger in modelling some in between clients’ acquisition and clients’ needs. What they tell you in their three year at university is to clean your Facebook page.
Foxwell: Are you seeing a divide between technology and the relationship manager?
Bouquieaux
There’s not a black or white answer. It all depends on the customer you are trying to address to. Private banks should, at the same time, protect the revenue, while still attracting and starting to make it sure that the clients stay with you. Studies show that when a customer is leaving an institution to go somewhere else, fundamentally if you look at the next generation a lot of them are more willing to make their own decisions. The personal contact will always remain and I think in private banking the human part will stay and be a significant part in the industry.
Marshall
In the segment of this market many clients do not want private banking at all, they want something really technological that they can drive themselves with. So, on the banking side there are people who want half market retail banking with a high level of technology. I wonder if our market can break down a bit with some people getting more into technology and not just the personal touch.
Albert
Our businesses are all brought up on one thing, which is trust. People have a relationship with you and have developed trust. The question is, can you get the same level of trust through social media or digital platform? You look at something like Nutmeg, which has started to get attraction to the market place, you don’t interact with people; you just interact with your computer. The human element of trust is going to disappear.
Marshall
I think there is a segment of wealthy people, which maybe is not even the 10-20% but that’s very technological. I think the market is going to split in that direction.
Reed
Our brokerage model has thrived because of the trust, the value of the relationship and the fact that a person is giving you advice and telling you what to do. I do agree that the market is going to split.
Marshall
In the UK we have never really had that brokerage appropriate model. The best similarity would be Hargreaves Lansdown. RDR has made it very difficult to give people advice let’s say below a million pounds of assets, which is quite a lot. Most of the people who have gone down the executionary route, which is the equivalent of brokerage, had no clue of what they were doing. Next time there is a big crash a lot of them will blow up. There is a group of people, who want a private banking type of service, but they don’t want the costs that go with it.
Evans: Internally, what is the mechanics, what is the way to reach clients, the way to determine the customer relationship to accept these channels?. Anyone on the table want to comment on CRM becoming more important in this context?
Bouquieaux
Today CRMs are more important especially for regulation. They way you link CRMs with what you produce is really important. The important thing is that the CRM is integrated with the global infrastructure so you can leverage all the information.
Lambert
(On platforms and CRM enabling the bank taking control) I think there’s a lot to be said about that, but I suppose one question is to what extent a bank should take control, because in this kind of multi-connected world it is clients that are in control. I think we have to be there and be smart about data, listen carefully. In our retail banks we have 25m customers, which is a lot and we don’t know at least half of them. We don’t know them at all, and therefore building up a much richer picture of who these clients are is the battle and I still don’t believe we are going to be in control of it, I still think that the client to an extent will control us. If we don’t respond to that, they’ll get someone else who does.
Sinclair
At Stonehage we deal with a far smaller client base of 1000 families worldwide. For us CRM is very important but it is the information and connection between families that has always been vital to us and thinking about creating opportunities for our clients which goes back to ‘knowing your client’, but also being able to build trust, create opportunities for them. These are key things for us in the CRM
Albert
I think any business that has a reasonable size of clients, the first thing you probably need to get your head around is clients’ segmentation. As a business, the one thing you can risk is spending too much money and time on clients who aren’t going to deliver any further business. So with your client segmentation, using your CRM technological system to provide that need would help us to understand where and how to deliver that message to our clients in the most efficient and effective way to minimize cost and concentrate in the areas where we are going to get returns.
Foxwell. Convergence means all channels merging and aggregating together. What’s the strategy implication in this? How do you unify all the channels? Or create a digital strategy?
Jones
Convergence as natural projections is reached when you integrate the tools in the right way. Back to what the processes must be doing, and not just what they are. For instance, if you want to make the best use out of LinkedIn, then you might achieve more using it for recruitment.
Tingle
We had a huge rush around mobile and tablets at the time of Apple, changing behaviour of people, and so you had to ensure you had the right app on the device. Going back to the Internet in the early days, we started up a very immature browser, with limited connectivity. Most banks had initially to download an app to overcome all of these issues, and actually the good news is we already have seen banks go with what we call a hyped-approached mobile device and you can choose the same performance as an app and you can choose exactly the same sophistication of UI, without having an app, so that means your Internet banking will support any mobile device, any browser it’ll be performed. So if you are about to take this move, I’d suggest don’t rush off and build apps for everything.
Albert
I see convergence becoming suddenly slightly different and also controversial. If I have a delivery system, would it be hard, print media, digital media, client interaction through my advisers, whatever the case, the converging point is what I am trying to achieve, so is it the client or my prospective client? That’s why I want the information that I push out, on a daily, monthly, yearly basis, to converge them all. As a marketing strategy I have to think about how and which media channel I am going to use, to produce as much touching space, thinking space and interaction space.
Hvamstad
I can respond to that. We have become the best European private bank in German speaking Europe and I was thinking at how I get to reach all that audience living in the UK. A few months ago, we were organising and supporting them at events at the (Swedish chamber of commerce- young professionals representing the most important Swedish families) and within 24 hours they had sent out news on our Twitter to all the members all the text we had written.
Albert
We have a division within our IT team, which is helping with marketing to put together a digital strategy. But anyway, for us, it is from our CEO (quite proactive) who looks at the different and changing market place, other institution and thinks about how to maintain that space. Because we are a amalgamation of so many businesses, for us is very important that we put up a singular message and culturally linked to all of our businesses.
Different strategies for different people mean different things. For us, digital strategy is around how we deliver the most effective portfolio evaluation and information to our clients that they can access. If I have 25m customers, I might be thinking a little bit differently in terms of my digital strategy.
Jones
It is an entirely different strategy when you think about the segments that you have, the type of customers that you have, so you are able to tailor the right kind of message and produce the right communication strategy. It is hard, if you really have got it wrong these people just get turned off.
Evans: Geographically, how do you find the US leading social media and cutting edge technology? How do you put together the best practice? (Comparing it to the UK, Asia)
Reed
In Canada, we actually have a head of social media. She monitors social media. Outside of Canada, we really do have more of the local tech strategy but I have to tell you it is not very well boosted. I don’t think I am not someone who doesn’t embrace technology, but knowing the types of clients that we deal with, the billionaires, I don’t know whether they are looking at these things, it feels very retail to me and so, yes, the UK has to be different to Asia, it has to be different to the offshore because people don’t want their information flowing around. We’ve just released a social media policy which basically says, "here’s what you can’t do", because you are representing the company. For religious belief, sports etc I think it comes in the code of conduct. It says, "You are representing RBC as an employee;" if someone fails in the integrity category I think we need to evaluate the situation.
Sinclair
It comes back to the firm globally understanding the corporate values and developing the right culture and behaviour because it is incredibly difficult to legislate and go to the detail of the do’s and don’ts. If you can build the behaviour based on the corporate values I think you have the right starting point, so you can structure your policy.
One needs to be careful and educate a family, there is the potential exposure from the security perspective, be aware and make sure they are kept current and embrace technology and the potential risks. It is always making sure that the partnership is supported through their understanding by their clients.
Evans: What exactly does platform mean? How do banks perceive it?
Reed
I think it can mean many things and for different people. In our world I suppose coming from a technology background, we obviously think of platforms as some shape or form whether its back office or front office. I think that what we are seeing now is that things are becoming more completed in terms of the capability of the overall platform. The good thing is that we now live in a world with standards and it is getting easier about how hard it is to create a platform that will deliver the promise of efficiency and taking costs out of your business. Let’s hope that’ll continue in the next few years. If you get the right platform you’ll bring a huge efficiency to your organisation. I’ve seen a couple of trends, more in retail, there’s now a rush to capture this new generation. We’re seeing banks looking for a platform that would allow setting up a brand new operation with an intention of creating a new stand alone bank in 6-9 months from scratch. Sometimes the platform approach can be a top down approach as well, so you’re not trying to replace everything, you build it on your assets but you start putting in the platform pieces on the top level.
Foxwell: any further comments? Social media?
Marshall
Going back to converging, one thing that could happen, if you look at Trip Advisor, is people complain all the time about their hotel experience, how are going to do that for banking?
Albert
At the moment we are going to reasonably finalize a set of rules to do that, but no one is going to make a rushed decision, some people are using them because client basis use it very wisely, some people are not using that at all, but everybody is thinking about this and how we can come forward using these platforms, and I think it is all very encouraging, we are very conscious and taking a very mature approach on how to deal with it.
Jones
The financial services industry gets criticised in that space, being slow to move forward. I think the fact that everyone’s here is a clarification that there is a drive to move forward. Regulation means that we have to be cautious. I think the best way to move forward in this sector is to integrate. When we recognise that social media is one thing that has different tools, if we are enough brave to integrate all these into our normal everyday business I think it’ll be the best way to look forward.
Hvamstad
I think there are a lot of challenges but at the same time there are a lot of opportunities. There are so many different ways to use social media I can think about; I used Twitter once. It is very stimulating to understand the challenges around a table, but I think there are many opportunities out there, and how you can learn from others, clients, peers.
Reed
I think we need to hire younger private bankers that get it and guide us and help us understand what we should be doing.
Howe
My reflection is that technology is really interesting but we have talked about people, people being at the heart of our strategy and what we are trying to achieve as a business and therefore we need to use the technology as an enabler. Somebody said to me last week that technology is a little bit like dog years, that a year in technology is like seven years and therefore some of the stuff is changing on a weekly basis. The temptation in large organisations to invest in huge platforms and that would be for five years and this reminds me to resist the temptation and to think about small steps rather than necessarily investing in one huge solution which frankly will be bankrupt tomorrow or next year.
