Swiss bankers play fintech catch-up

Traditional wealth managers have been among the slowest parts of the finance industry to embrace fintech, with their ultra-wealthy clients preferring the personal touch of silver-service financial advice over interacting with chatbots.

But even the world’s richest have been forced to use digital tools to manage their fortunes throughout the pandemic. This has coincided with a drive from Switzerland’s wealth managers to invest in fintech and digitisation to cut costs and serve their clients more efficiently.

“It’s clear that this pandemic has accelerated the client’s digital expectations, and the need for technology investments,” new UBS chief executive Ralph Hamers said as the world’s biggest wealth manager reported results last month. “That need has been accelerated by at least three if not five years.” 

“That requires far greater investment by financial firms. And those that have the scale will benefit from it the most.”

Hamers was the surprise choice to replace Sergio Ermotti last year, given his lack of experience in investment banking or wealth management. However, UBS’s board was drawn to the 55-year-old due to his experience cutting costs at ING and turning the Dutch bank into a digital-savvy lender. They hoped he would bring his tech knowhow to UBS, a giant with high costs that has lagged peers on digitisation.

Analysts, shareholders and journalists were eager to hear Hamers’ initial thoughts on how he would embrace fintech at UBS. While he stopped short of unveiling a transformative strategy, even a crude language analysis of his first results presentation highlights the change in direction.

Hamers said “digital” or “digitisation” 13 times during the analyst Q&A session, compared to an average of 3.3 times for Ermotti during his final three quarterly results presentations. Hamers mentioned “technology” 17 times, compared to an average of just 2.6 times for Ermotti. 

Hamers talked about the need to “turn technology from an enabler, something that is at the end of the decision-making process, to making technology a differentiator, which is at the beginning of the decision-making process and at the beginning of how we improve our services to our clients”.

He said he was focused on three areas of the business: digitising execution platforms and services in the investment bank; improving digital services at the group’s domestic universal bank; and using artificial intelligence within its wealth management division.

“You may find it strange, but I do think that if we do a very good job at analysing the data and applying artificial intelligence in understanding our clients better . . . I am convinced we can . . . be much more supportive and effective with our clients,” he added.

Julius Baer is another Swiss bank that has been trialling the use of AI in dealing with its ultra-wealthy clients. Philipp Rickenbacher, Julius Baer’s chief executive, told fintechFT that the Zurich-based private bank had been using the tools to assess how clients’ portfolios are likely to perform.

He said the group had invested SFr90m ($100m) digitising client services throughout 2020 and that “Covid-19 has been a phenomenal accelerator to those investments”.

With branches and offices closed throughout the year, Julius Baer began digitally onboarding clients using tools such as video identification. It also introduced e-signatures and chat tools to interact with clients.

However, Rickenbacher insisted he did not want to put digitisation at the centre of the bank’s business strategy, and wanted to avoid the “industrialisation of wealth management”. Instead, the technology investments would augment the personal service offered by Julius Baer’s advisers, not replace it.

“This is not changing in any way the personal touch nor is this changing in any way the confidentiality of client data,” he said. “Our objective is to create a better experience for our clients by not having them recount and recite 20 times the data that they’ve given us.”

“Being able to join the dots in an easier and more straightforward way and adding more value in shorter times. That’s really how we are using it with our clients.”

Quick Fire Q&A

Company name: Neo

When founded: 2017

Where based: Barcelona

CEO: Laurent Descout

What do you sell, and who do you sell it to: We offer a cloud-based corporate banking platform, featuring multicurrency account numbers, payments and collections in 30+ currencies and FX hedging.

How did you get started: Most SMEs don’t have access to a cost-effective treasury management or a cross-border payments service. We want to change that.

Amount of money raised so far: €10m

Valuation at latest fundraising: Not disclosed

Major shareholders: Senior management team, Duncan MacInnes, Marc Menasé

There are lots of fintechs out there — what makes you so special: We can open multicurrency accounts in days, offer lower fees for payments and FX and reduce manual tasks for treasurers.

Fintech fascination

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Ant agrees overhaul with Chinese regulators: Ant Group has agreed a restructuring plan after drawing the ire of Chinese regulators (and powerful rivals like state banks) late last year. Founder Jack Ma had previously tried to pitch Ant as a “techfin” rather than a fintech, to distance itself from the more highly regulated finance industry, but the new set-up will see it treated more like a bank with strict capital requirements.

Britain’s oldest new bank: For some fintechs, being treated more like a bank is a good thing. Founded in 2005, Cashplus is one of the UK’s oldest fintechs, but it had previously operated with a more limited-money licence. Now it has finally become a full bank, and is hoping to use the new licence to slash its funding costs, step up lending to small businesses and challenge younger fintechs like Monzo and Starling.

Wirecard fallout: Last week we reported that the German government had pushed out the head of its financial watchdog as a result of the Wirecard scandal; this week we got a bit more detail on what it plans to do next. Finance minister Olaf Scholz said he would make BaFin “more powerful, more rigorous and more effective” with new powers such as a special financial task force for investigating suspected frauds, but critics said the government had not done enough to address concerns about the regulator’s independence.