Sorting through the noise: insights for private banks’ digital agenda

Digitalisation is rapidly transforming the world as we know it, with 2018 set to bring more changes. The year kicked-off with the retail sector waking-up to the potential disruption that will come from Amazon Go – a checkout-free grocery store trialled in the US – which relies on cameras and sensors to track what shoppers select and purchase through the Amazon Go app. Alibaba launched a similar concept last year – Tao Café – allowing customers to select and buy items through their Taobao app, with face-recognition cameras tracking their purchases. These innovations have been made possible thanks to major advances in mobile payments, with players like Alipay and WeChat Pay infiltrating stores, taxis and even vegetable vendors in China.

The wealth management industry is also embracing the digital revolution. Many private banks already offer mobile-based apps for their clients in addition to robo-advisory services, which use algorithms to deliver investment ideas allowing relationship managers to spend more time on strengthening other critical elements of the advisory process.

The wealth sector is also becoming more diversified, with an increasing number of nimble, fintech

start-ups challenging traditional banks – such as Lufax, China’s largest online wealth management platform. Seeking a valuation of USD60 billion through its planned April IPO in Hong Kong, Lufax could become China’s second most valuable fintech firm behind Alibaba’s affiliate, Ant Financial ¹. These changes are increasingly facilitated by regulators, like the Hong Kong Monetary Authority, which recently revised its authorisation guidelines for virtual banks and opened the door for fintech companies to offer banking services including wealth management ². There is growing support for the growth of digital banking. 

At the same time as new players are entering the space, younger, more tech-savvy individuals are becoming an increasingly important demographic in the wealth management space in Asia Pacific. The terms ‘millennials’ and ‘next-gen-clients’ are fast becoming common buzzwords in consulting reports on the industry, putting pressure on traditional private banks to ramp-up their digital transformation agendas.

The Empowered Investor Part II: Delivering on Digital – Building a Future-Proofed Advisory Model

The second part of the Empowered Investor report, written by Scorpio Partnership in collaboration with BNP Paribas Corporate & Institutional Banking (CIB), details the changes that private banks could make to develop robust, long-term digital transformation plans. The report surveyed 1,020 high-net-worth individuals across Asia Pacific with an average net worth of USD8.5 million. In Part I, the findings showed that a new investor profile is visible across the region – the Empowered Investors – who are characterised by their advanced interest in execution-only services and sophisticated platforms. Part II continues the conversation by showing that digital delivery must be a strategic priority if the wealth sector is to change with the times and meet the expectations of this new investor profile. Amongst the findings, three key statistics stand-out:

• 82% of HNWIs believe the gap between human and robo-capabilities has already closed, or is likely to in the future.
  
• 47% want to engage in a digital forum in which they can exchange ideas with institutions and individuals (like the LinkedIn model). 
  
• 38% would be comfortable paying more to an institution capable of integrating both financial and social impact goals. 
  

[1] Reuters, “China’s Lufax seeks $60 billion valuation with April Hong Kong IPO: SCMP”, 15 January, 2018
[2] HKMA, “Guideline on Authorization of Virtual Banks”, 6 February, 2018