IBS Journal July – August 2015
‘Some very interesting innovations haven’t yet reached the tipping point
but could prove disruptive if they do.’ Jean-Luc Freymond, Sage SA
different steps of the process such as client on-boarding, order capture or periodical data screening.’ IPBS’s Raine flags a widespread but
Profile’s Anand throws crowdfunding
into the mix as a possible additional rele- vant phenomenon. ‘Crowdfunding compa- nies, offering primary and secondary mar- ket capabilities, and a collaboration of pri- vate banks with these platforms, is a trend to watch out for as it will create a diversi- fied type of service.’ At a more traditional level, IPBS’s
Raine, says, ‘what we are seeing in the post Swiss-demise era is a diaspora of small start-ups in asset management which are serving the clients who have left the now-distrusted, mega multi-faceted, bank- ing concerns.’ In terms of a fragmentation and
divides between activities, ERI’s Hacking foresees that in the mature banking mar- kets, small players, when not bought by bigger banks, could consider getting rid of banking licences to focus on front office activities with fewer regulatory and fiscal constraints.
Regulation
When it comes to regulation, more is on the way. ‘MiFID II will need to be carefully considered as it will have an impact across all parts of the wealth/ asset management sector,’ says Young. ‘Firms should be considering its impact already. The regulator and the investor are increasingly looking for more trans- parency and improved and demonstrable corporate conduct. Technology will be a significant enabler here and firms which do not have modern, well-designed IT infrastructures will be at an increasing disadvantage.’
Jacquet-Lagrèze believes new or
recent regulations are pushing wealth managers and private bankers to auto- mate processes to avoid increased com- pliance costs or to decrease such costs. He feels this is true especially in Switzerland in the area of cross-border activities and tax advisory or when it comes to apply- ing the latest and emerging regulations (automatic exchange of information from OECD, MiFID II in the EU). The workload will not only be around compliance per se but also adapting to the side effects on the business, such as an increased need for tax advisory services in off-shore private bank- ing, and having to restrict cross-border activities or focus on particular markets. Hacking believes that the potential
impact of the Common Reporting Stand- ard seems to have been under-estimated by many organisations, especially given that this will roll on for several years and will cover such a large number of coun- tries. ‘In addition to this, cost pressures and the need to squeeze further cost effi- ciencies out of the operating model will continue to occupy banks as will the rapid change in what is possible with technolo- gy. The sector has not really been impact- ed yet by the possibilities offered by “big data” but will undoubtedly learn in time from the retail banking sector – just as it did with digital channels.’ ‘Most clients that we talk to current-
ly have initiatives around automation of their KYC process or more generally ensur- ing their regulatory compliance,’ says Frey- mond. ‘Such projects include additional data capture, production of reports for the regulatory bodies and automated checks at
© IBS Intelligence 2015
less commonly discussed issue. ‘The big banks and asset managers have been burned badly by employee disaffection and greed and this will be difficult to man- age, as policing disaffected employees is not an easy task. In many cases the whistle blowers have been able to whistle because there has been something to whistle about, and the only solution for institutions man- aging money, that they should not have, is to get rid of it as soon as possible.’ He continues: ‘There are also sharp
shooters in the back rooms, manipulating markets, that cost a fortune in penalties and fines once discovered. How to prevent that is the hundred million dollar question. As developed countries spend more than they earn, there is, and will continue to be, a relentless pursuit of citizens who reside and earn a living elsewhere and we will see significant growth and need to manage the FATCAs of all of these major countries of the world.’ He feels this will become a sig- nificant challenge for both large and small players as they struggle to adapt technolo- gy to manage an endless and ever increas- ing ‘mandate of world powers’. ‘With many people holding two, three, four, or more passports, the problem will become more bizarre and tax treaties will have to be worked into the various home countries’ tax systems.’
Conclusion
It is easy to conclude that life has become a whole lot more complex for wealth managers than in the past and that this can only be good for customers. Never before have the established wealth managers and private banks been under so much competitive and regulatory pressure. This is shaking them out of their old ways, most clearly seen in the amount of catch-up investment at the front-end that is happen- ing at present, potentially with attention also having to turn to the back office if they are truly to transform, survive and prosper in a rapidly changing market.
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overview: wealth management
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