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PRIVATE BANKING


A modern interaction with an automated system


The notion that private banking is a much slower process than its retail equivalent, with much of the technology lacking the innovative edge to drive the foundation of endless challenger banks, may in part be true. But companies are striving to achieve the same level of digital disruption and sophistication seen in retail banks


Junior Fintech Reporter Henry Vilar


W


hat is private banking, if not a very personal relationship between bank staff and a customer with heaps of cash? In the digital age, it turns out that many components dilute the personal touch of this relation, such as mobile channels. Private banking and wealth management is an area of banking that is usually relegated into a corner due to its customer volume size, in comparison, and its less disruptive nature.


In a conversation with Peter Schramme, chief business development officer at Objectway, he gave us a very clear picture of the lay of the land. He sees that there are three challenges to the current state of private banking: challenger banks; the large innovation gap between private banking and tech development in other areas; and the cost of income.


Challenger banks do not represent a threat due to their volume and current size of the market share, but rather due to the fact that they are raising the bar for customer expectations. In an area that notoriously struggles to keep up with the pace of digital disruption, this is a deal breaker. This relates to the gap in innovation that we mentioned, since banking – and in particular wealth management and private banking – see the lowest investment in innovation and R&D out of all industries. Given that banking is highly driven by digital disruption, this is a large issue that we are now confronting.


Lastly, the cost of income stems from the fact that despite having witness to an increase in the volume of customers, the profitability of the industry has gone down, mostly due to the facts that models remain unchanged.


Keeping an eye out


“There are three aspects that I consider of vital importance in the short to medium term,” Schramme tells IBS Journal. “The first one is the importance of automation and robo-advisory. This distinguishes market leaders from market laggers, as it increases efficiency and accuracy, allowing the advisor to focus on the customers themselves.”


The second point made is what Schramme calls “self-service and hybrid enablement”. According to Schramme, this pushes clients to


www.ibsintelligence.com | © IBS Intelligence 2018


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