Why Digital Client Journeys Are Complementary to Inclusive Wealth Management
Expert Talk UX with Bank Vontobel AG
During your career, how has the importance of digital client journeys changed?
To give you an idea of how much has changed, let me tell you a little story from when I was still a student. Back in the days when Peter Wuffli was still CEO, I visited the UBS trading floor and saw the online FX trading tool they were releasing. That was 16 years ago. Although the technology wasn’t as advanced as it is nowadays, I remember being really amazed to see how much digital power and money UBS were investing in developing this nice tool for their private clients.
Back in those days, besides e-banking, not many areas of the big banks’ offering were digital compared with the rest of their offering. Digital was all about internal processes – about efficiency inside, but not so much about the clients outside.
I’d like to tell you a second story. I'm the proud father of two daughters. About five years ago I wanted to open an account at the private bank for one of them. I received a folder 10 centimeters thick, all paper, and had to fill out all the questions. Now, five years later, you can see that the business is changing. The digital client journey is much more important: banks are shifting to digital. Looking back all that time I would say that 15 years ago we were really at the beginning.
Digital was very much about the inside, about internalization, about efficiency inside organizations and banks. About five years ago it completely changed – thanks among other things to the many fintechs that have challenged established banks and their ways of thinking and working.
Now you can see that many banks, both in Switzerland and abroad, have totally embraced the digital client journey, from onboarding to offboarding, and within the relationship during the life cycle of the client. It has totally changed, from an initial focus on efficiency and improving internal processes to client and user experience. This reflects a shift in the role of client life cycle management online.
Vontobel has launched excellent digital client journeys in the last few years. Are we now experiencing a major trend shift from offline to online when it comes to wealth management?
It's a key point when we’re talking about wealth management. Wealth management is about trust, about a partnership that you build in the long term. It's not about a retail accounts, it's not about payments. It's not about these things. So I think that non-digital ways of working will remain very, very important in the wealth management industry. Why? Because of all this trust: all the things I just mentioned before the partnership emerges that clients need to really trust someone, to trust an institution.
So I don't think we're going to shift to a totally digital way of working when it comes to wealth management. I think that the digital approach will enhance and complement the offering that already exists.
The crisis that we’re seeing now is a very important factor. Why? Let’s be very straightforward and frank: The situation is blocked everywhere. Travel isn’t allowed. Relationship managers who usually travel to see their clients abroad or even in Switzerland aren’t able to meet them face to face anymore. They have to find new ways of acquiring new clients and new ways of communicating. These new ways of acquiring clients are typically digital. To make it short, I don’t think it’s going to be offline versus online or digital versus non-digital. I think it's going to be about the offline and online world working together.
Vontobel claims that in your new online app “Volt”, you can create a digital account in less than 15 minutes. That’s very impressive. How is this possible? What role did technology play in achieving such a goal?
Indeed. We’ve developed “Volt”, which is a wealth management platform which we offer to people domiciled in Switzerland. Clients are able to open an account and invest within 15 minutes. So you download an app and you onboard yourself. You answer all the risk-related questions, you create your own risk profile, and so on. You view someone through a camera to identify yourself, all you need is your passport or ID. By the end of the process you already have an IBAN: the actual IBAN for your personal relationship at Bank Vontobel.
Just think about it: You get to open an account within 15 minutes, including all the identification and compliance aspects, and have an account that you can fund within a few minutes from another bank. This is something really amazing for a Swiss bank!
Technology is obviously extremely important too. To reach that level, we worked with a lot of partners. That includes partners internally, people from compliance and legal, who had to understand the new way of working.
Technology ultimately enhanced this process to give the best service to clients.
Apart from technology, the mindset is also very important − the mindset of all the colleagues involved, not only those on the front line. All the people I’ve mentioned played an extremely important role in realizing such a set-up.
What advice would you give to colleagues in the industry when it comes to designing and launching new digital client journeys?
I think that the best advice that we should always give is to listen to your customers! You have plenty of customers, and usually they’re very happy when you ask for their opinion. So take the time to talk with them to assess your propositions and what you’re developing. At every step in the development of your digital client journey, go back to your clients to get their feedback.
This is really of enormous value for banks and financial institutions in general, and most customers are happy to help. So the only recommendation I can give is this: talk to them, talk to them, talk to them!
You mentioned before that the current situation due to Covid-19 has also had a massive impact on wealth management and the way client advisers can interact with their clients and colleagues.
How do you think the banking market is going to change in the future in terms of digitalization?
I think that’s quite a tricky question. For sure there will be increased digitalization, and what we’re going to see – in fact what we’re already seeing in this crisis − is that the usual way of working is gone. Relationship managers are not able to meet their clients face to face anymore, are not able to travel, and aren’t able to acquire new clients the old way.
Digitalization is no longer a choice. It’s a must. People will have to accept this and integrate it into their new way of working.
The second point is that I think digitalization will help banks develop. Why? Banking, especially wealth management, is now extremely complex. You have to master this complexity. Most of the time relationship managers are probably not going to be able to master all the pieces. That’s why the biggest banks are trying to focus and specialize on single markets. Just think about all the issues involved: cross-border and compliance aspects, MIFID 1+2, FIDLEG in Switzerland, and other regulations. All these regulations make life much more complicated for bankers than it was in the past.
So here I think digitalization will be extremely helpful, enabling bankers to do their job in the best possible way. It will also help them to give the best advice and support to their clients, as well as protecting the banks from any wrongdoings. I think digitalization here, in the sense of supporting banks and bankers in doing their business, is much more important, and will play a key role.
My third point is a bit unfortunate: Obviously digitalization costs a lot, and banks might not always be able to spend this money on their development. So I think what we’re again going to see is banks disappearing in Switzerland. Why? Because the costs of digitalization are very high, and some banks will not be able to cope with these costs.
To sum up my view of the changes that are going to happen in the future, I would say
1.Digitalization is a must in every area of client relationships;
2.Digitalization helps banks and bankers to better serve their clients; and
3.Higher levels of digitalization mean higher costs, which some banks may not be able to bear and thus may disappear.
Thank you so much for joining me for today’s expert talk. All the best to you in the future.