Swiss Private Banking’s Feckless Apps

Tuesday, 4 August 2020 08:51 | Written by Samuel Gerber

Digital applications at wealth managers are crude and lag even those of retail banks, a new study finds. No Swiss provider made it into the top-ten rankings, reports.

First-half results from Swiss wealth managers like Julius Baer, UBS, EFG, Vontobel and Credit Suisse show: the corona crash in March took a bite out of asset piles. The shortfall could only partly be made up with net new money – and clients are deeply insecure.

This represents a new normal, according to American bank Morgan Stanley and consulting firm Oliver Wyman, which in a joint «Global Wealth Management Report 2020» calculate that the wealth management industry is suffering a lost year of growth due to the pandemic. The wealthy’s funds will shrink by an average four percent – and a recovery isn’t expected before next year.

Slash, Buy, Digitize

This leaves private bankers without the still rosy growth prospects they had previously enjoyed. In the last decade, wealth managers could count on roughly eight percent growth in assets, according to the study’s authors. Without this fillip, margin erosion as well as higher costs weigh heavier – the same effect that Swiss retail lenders long ago faced in their mortgage loan businesses.

The antidote? Cutting costs and consolidating, according to Morgan Stanley and Oliver Wyman. A third alternative is far less tested: stepping up digitization efforts. This, the study illustrates, is easier said than done going by current standards: existing applications leave much to be desired  – especially those at Swiss wealth managers.

Corona Laid Groundwork

Clients or private banks and asset managers laid the groundwork: during March and April when commercial air travel was largely halted, digital communication channels boomed. Online interaction between banks and clients surged ten-fold, with three times as many virtual meetings via video conferencing than otherwise, according to the report. Born out of necessity, this so-called multi-channel access is taking hold, Morgan Stanley and Oliver Wyman note. By 2024, a personal and direct exchange between private banker and client will be the exception – roughly 20 percent of all contacts, is their forecast (graph below). This brings wealth applications in particular into sharper focus – but most solutions are crude in the authors’ view, lagging even those offered by retail lenders.

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