While human relationships remain at the heart of the wealth management business, clients increasingly want to interact digitally with their banks. Influenced by their experiences with companies such as Apple, Amazon and Google, consumers expect the same seamless interaction when dealing with fund managers. So far, the industry has already automated a great deal, enabling clients to personalise their wealth management experience. Wealth management funds have also invested heavily in systems that learn as their advisors use them, which in turn allows advisors to tailor their services to suit the needs of their clients.
Overall, digitisation is a key strategic priority for wealth management funds around the world, as it offers organisations working in the industry the capability to offer added value for their customers. UBS Wealth Management is a market leader in terms of its digitisation strategy as, unlike many its competitors, it has managed to define the types of services it wishes to provide for its client base and, more importantly, has a clear vision for how it will implement its plan. European CEO spoke to Dirk Klee, Chief Operating Officer for WM and Head of WM Digital Strategy at UBS, to find out how the firm is expanding its range of products and services through its new comprehensive digital strategy.
Technology should, first and foremost, be seen as a means to an end. We must use digital technology to enhance the personal relationship between clients and their advisors, and not to replace it
What role has digitisation played for UBS, in terms of the firm’s growth?
We provide a superior UBS client experience, and digitisation means better data, which means greater insight. Client advisors can look at a portfolio and add value by providing real expertise and context. By creating bespoke solutions for clients, we can fulfil our core purpose of protecting and growing wealth. Digitisation enables us to expand advisory services and to improve service quality generally, as well as further simplifying the individual client’s relationship with the bank.
In 2013, as part of our digitisation strategy, we introduced UBS Advice, an innovative flat-fee digital advisory solution that represents an important step on the path to digital transformation. UBS Advice guarantees the quality of the client portfolio and ensures that clients remain on the predefined course in terms of achieving their investment objectives. Portfolios are reviewed digitally and are subject to structured and systematic monitoring. Through the use of digital tools, UBS Advice is able to review over 650,000 portfolios overnight and can quickly identify deviations from defined investment goals.
How has branding in banking changed in recent years?
In the wake of the financial crisis, banking has changed fundamentally. In 2011, we set out three critical objectives for UBS: executing our strategy, delivering for our clients and unlocking our growth potential. We accelerated the execution of our strategy in 2012 and have since made substantial progress, focusing our activities on our traditional strengths and on businesses that are both dedicated to serving clients and are well positioned to maximise value for shareholders. Our new brand launch was the logical next step in communicating the changed strategy and focus of UBS: financial stability and exceptional proximity to clients.
The core brand promise builds on insights from four key areas: target customer insights (based on research in eight countries), competitor insights, company insights and contextual insights. We have also reviewed and overhauled our approach to client communication and introduced a simple, human and clear tone of voice. In short, we have evolved the brand to look and feel fresh, modern, clean and
mobile-compatible.
What impact have new banking regulations had on the industry?
The new regulations and, at times, quite stringent demands have obviously had a great impact. At UBS, we have a strong capital ratio and have significantly reduced risk-weighted assets and costs, while simultaneously growing our business and enhancing our competitive position. Nevertheless, in view of changes in the macroeconomic environment, both actual and forecast, improving effectiveness and efficiency is still a priority.
In terms of digitisation, many regulators are extremely interested in supporting digital innovation. In the UK, for instance, regulators have been talking to us about digital advisory and automation. They see it as a potential way to support product suitability. Regulation is an essential part of the finance industry and it also defines why fintech firms and start-ups work with us, and why we will remain at the forefront if we continue to drive innovation.
What influence will the Wealth Management Innovation Labs in Zurich and Singapore have?
In my area, we don’t look to other banks for inspiration, but to big tech companies. Several years ago we established our first Innovation Spaces, where fresh ideas could be generated and collected through divisional ‘innovation pipelines’.
Representatives from business and IT jointly evaluated the ideas submitted and decided which ones should be given the green light. These spaces have evolved into Innovation Labs that bring in external experts and fintech firms to drive forward ideas with us.
One idea to emerge from the Innovation Labs – YNOME – is a crowdsourced marketplace of private banking services. The vision could be to create a platform similar to Amazon or Uber that offers private banking users access to services from integrated private banks, fintech companies, direct banks, universal banks and family offices.
How do you see the banking industry evolving further in the coming years?
In the future, products will look very different. There will be new and better ways of looking at things. But know-how, content and expertise will remain the distinguishing features and key differentiators of UBS Wealth Management.
Technology should, first and foremost, be seen as a means to an end. We must use digital technology to enhance the personal relationship between clients and their advisors, and not to replace it. The investment and advisory business will transform into a high-tech and high-touch industry, one in which clients themselves choose the points and channels where they receive our services – just like in other areas of everyday life.
At UBS, we plan in scenarios. We look at what we are delivering now and what the client will expect from us in three to five years. This is why we have the UBS Innovation Labs looking at near and mid-term trends, and the UBS Y think tank analysing the more distant future. We follow technological developments very closely, and have invested hundreds of millions of Swiss francs to enhance our digital capabilities and integrate new innovations.
What do you see as being particularly vital for future success in the banking industry?
We need to be able to understand and deliver what our clients want. We must make it easy for our clients to communicate with us. Clients, particularly the new generation, want more than just product-driven innovation. They want constant access to services, wherever they are. The new generation, which grew up with the internet, has completely different expectations regarding their relationship with their bank.
The clients of tomorrow will demand virtual interaction and a significantly greater say over how their investments are structured. This is what they are used to in their digital world and in other areas of life, such as communication on Twitter and Facebook. They want simple, quick access to all information, similar to what they experience with Google or Amazon. They also demand greater transparency and the option to compare products at any time. In short, they want everything to be available at all times.
Our mission is to maintain levels of traditional personal service, retain the trust of our clients and enrich their experience using big data, machine learning and
artificial intelligence.