The digital revolution is long underway in the consumer banking sector, where apps have made digital banking an ‘anywhere, anytime’ experience. However, private banking is seen as one of the sectors of the financial services industry least attuned to the potential of digital technology, and significantly behind non-financial services.
Now that’s starting to change, in part because of a generational change within private banks’ client bases. Younger members of affluent and wealthy families, who have grown up with high-tech devices and always-on connections, expect that immediacy in their private banking relationships. Meanwhile, newly-earned wealth in many cases has been created in the technology industry itself, a sharp change from previous generations.
What do these clients want? In short, the same convenience, ease of use and speed in their financial affairs that’s available in other areas At the same time, they expect the personalised nature of service that characterised those one-on-one meetings.
Clients will judge the services they receive by the standards set by digital interaction in other areas of their lives – and private banks that don’t match up will be affected. But the industry also has much to gain, thanks to a broad array of cost savings and efficiencies that can improve the economics of the sector even as products and services become more personalised and hones to the client’s requirements. It can also. help institutions to fulfil their regulatory requirements more effectively, from customer due diligence to demonstrating the suitability of advice.
Today wealth management professionals worldwide accept their business will become more technology-driven over the coming years, but it’s not a be-all and end-all. Digital transformation is not a goal in itself, but technology underlying a range of tools to supplement and enhance what remains the core of the private banking business – personal human relationships.
Clients are not about to replace the human touch for interaction with computer systems, not least because by the nature of the business their preferences and requirements are complex – and becoming even more so in a globalised and mobile world in which families, their economic interests and assets are increasingly likely to span multiple jurisdictions.
The promise held out by new technology is a process of evolution, not revolution, in which new channels of communication are being added to traditional private banking relationships. One-to-one interactions will still take place face to face, but supplemented by long-distance communications that enable the speed and immediacy to which today’s clients are accustomed.
Enhancement and smoothing of this process of interaction through new technologies and channels will not create distance between the private banker and his client but enhance and deepen the relationship. The result should be a better understanding of the client’s needs and the ability to tailor solutions ever more precisely to those requirements.
Private banks integrated in an universal banking group are already in a position to learn from technological innovation pioneered in the personal banking space and draw lessons about their relevance to private banking. ING’s acknowledged position as a leader in digital transformation mean that many of the aspects through which technology can enhance the private banking sector are already deep in its DNA.