Private bank executive A: Come on guys, fintech represents a chance to game-change the quantum of our opportunity and ladder off our strategy of digitising the wealth space.
Private bank executive B: I hear you, Jolyon. If we leverage the technology piece, we can better curate the high net worth offering across a platform of geographies.
Private bank executive A: Xander, you’ve just aligned our mission hammer with the head of the outcome nail. Bung the geek squad a few mill to optimise the web app and we can better sweat our Asian footprint, driving incremental value.
Private bank executive B: You mean, upweight our innovation to deliver a more client-focused fee experience? In China?
Private bank executive A: Yep, yah and affirmative, X-man. And, if we give the sales boys a few widgets for their iPads, in the go-forward scenario, I envision a monetisable online hub.
Private bank executive C: Hmm. Or we could just do what we always do in the Far East. Fly in some minor European royal to get the clients hammered on Lafite.
Private bank executives A&B: There is that . . .
Judging by two recent reports, this is the sort of conversation now taking place between wealth managers across the globe. At least, I like to think it is.
According to a new survey by Swiss consultancy MyPrivateBanking Research, many banks and wealth management groups have multimillion-dollar budgets for digital innovation, but are spending them only on incremental improvements, to apps and websites, rather than on “big, disruptive technologies”, such as automated “robo-advice” and crowdfunding.
At the same time, the Financial Times has found that others are still reliant on a low-tech approach, notably LGT private bank, where customer relationship management in Asia lately involved Princess Marie of Liechtenstein conducting a few wine tastings. Not in the circumstances imagined above, I hasten to add; the princess’s family happens to own the bank.
“Clients love her,” an LGT spokesperson says. “How many people can say, ‘Hey, I just had a casual conversation with the princess of Liechtenstein?’ ” How many, indeed.
These strategic decisions are unlikely to trouble family offices, though. Their singular clients are more likely to share a second cousin with Her Serene Highness than a wine spittoon. In fact, it was by marrying her second cousin that plain old Countess Marie Aglaë Bonaventura Theresia Kinsky von Wchinitz und Tettau became part of the princely family. And none of them would ever say, “Hey, I just had a casual conversation with a robo-adviser about asset allocation.”
But their children might, believes the chief technology officer of one family office. “Robo-advice is not something the current generation is looking for . . . but it will be something that the next generation will want to know they can access,” argues Nicholas Bernard of Stonehage Fleming.
“The next generation will be looking for a comprehensive, cross-platform wealth management application that is not just for investments but includes, for example, a crowdfunding philanthropy platform, secure messaging services, a bespoke reporting dashboard.”
Few family offices have fintech solutions for any of this, as yet. “Currently, digital innovation within family offices is predominantly used to facilitate better client service delivery . . . rather than truly disrupting the model,” admits Alex Fray, group chief executive of Boston Multi Family Office. “This is partly because the complexity and bespoke nature of family offices makes robo-advice difficult to credibly achieve.”
Still, Fray is convinced this fintech challenge can be met. “Digital disruption and innovation will undoubtedly transform financial services in the coming years, including the family office sector.” Until then, there’s always the corkscrew.
Matthew Vincent is the FT’s deputy companies editor