This article forms part in a series on the impact of COVID-19 on the Swiss banking industry. Deloitte will be publishing on an ongoing basis its perspectives on key implications and potential solutions that banks should consider.

Introduction

COVID-19 is having a dramatic impact on individuals, communities, and organizations. No financial institution is immune from its effects. Firms have taken action to protect themselves, their employees and their clients in the short term, and they are also considering how to future-proof their business for a ‘post crisis’ world.

In previous blogs in our series, we suggested immediate steps that banks should take as they transition from the RESPOND to the RECOVER phase. This blog post turns the spotlight on the post-crisis ‘new normal’ environment and the competitive advantage that wealth managers could gain with a digitally-enabled front office. Our insights are based on extensive project experience with leading financial services firms, market observations, and a Deloitte study that discusses the impact of the pandemic on digitalization in the Asia Pacific region: ‘Navigating towards a 'next normal’ after COVID-19 - Lessons from APAC wealth managers’.

Improving the digital capabilities of wealth managers

The Deloitte study found that while certain front office tasks in the client life cycle have a high potential for digitalization, most executives still believe that their core business of advising wealthy and sophisticated clients with complex financial needs remains at heart a 'people business'. Nonetheless, all of them have clear plans for digitalization (see Figure below) and are looking continually for ways to digital-enable their client advisors.

Most wealth managers continue to prioritize their digitalization initiatives around client onboarding, which has traditionally been an onerous and cumbersome exercise. An example of a more contemporary initiative is the application of video authentication, electronic signatures and approval workflows with remote consent, which has emerged because, as the APAC COO at BNP Paribas recently commented: “social distancing and split teams will become the new normal, even after the pandemic”. There are also signs of progress toward digitalization with trade execution and reporting. For instance DBS with its iWealth app, allows its clients a flexible execution of self-initiated standard transactions in stocks, funds or FX trades, but advises individuals to contact their advisor for the handling of more complex products. The ability to act independently of client advisors increased transaction volumes during the crisis by a factor of x2.5 on Credit Suisse’ Digital Private Banking platform, and by a factor of x4 on a similar UBS e-trading solution¹.

While both prospecting and client advisory certainly require a large human element to win clients and keep satisfaction high, these activities can be supported and enabled digitally. For example, many prospects spend an increasing amount of their time online, and most players will therefore need to upgrade their digital and performance marketing capabilities in order to reach them through targeted campaigns. BNP Paribas, for instance, used the crisis to take a first step in this direction by providing “non-traditional market updates” using webinars and audio conferences, where selected clients can interact with the bank’s Chief Investment Officer^1, and select banks are contemplating opening webinars to prospects to attract new assets. Client advisory, arguably the core human element in the wealth management life cycle, may also be digitally enhanced and supplemented by elements of needs-based investing around life goals or personal values, to ultimately make the financial plan a living digital document that is updated on an ongoing basis. Nonetheless, digitally advanced advisory services have not yet been broadly deployed, such as hybrid advisory mandates combining predictive analytics with personal advice, automated customized trading ideas, or comparisons between clients' and banks’ reference portfolio with the optionality of 'one-click' switch.

Conclusion

To enjoy a competitive advantage in a 'new normal', a more digitally-enabled front office will be a key requirement, combined with clear choices along client segments and service models. Most wealth managers give priority to digitalization around client onboarding, but leading firms started to provide digital support to the traditional human elements of the client life cycle: client advisory. Further advancements in this field, for instance with hybrid advisory solutions, could lead to even more efficient and meaningful interaction between clients and their advisors. The outcomes may include increased client activity and higher assets under management (AuM) load ratios for client advisors – contributing to the much needed profitability increase for many wealth managers.

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¹ Source: Asia Private Banker. Braving the Storm: PBs share success in digital advisory during pandemic

COVID-19 banking blog series

• 16.04.2020 - COVID-19 ‘back to the office’ plan for the banking industry
• 11.05.2020 - COVID-19: Emergency solutions worth keeping for the long term
• 18.05.2020 - COVID-19 related strategic scenario design and financial impact assessment for banks
• 26.05.2020 - Swiss banking in a post-COVID-19 World: How to turn the crisis into an opportunity
• 28.05.2020 - COVID-19 boots digitalisation of retail banking 

Patrik Spiller - Partner, Monitor Deloitte Strategy Consulting and Wealth Management Industry Lead

Patrik leads Strategy and Analytics in Switzerland as well as the Wealth Management Industry Practice in North South Europe. He has 20 years of experience in banking industry consulting. He supported many leading international banking institutions and wealth managers in the development of innovation and transformational strategies, technology and operational strategies as well as shaping cost reduction programmes.

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Christoph Künzle - Director, Monitor Deloitte Strategy Consulting

Christoph is a Director within the Swiss Monitor Deloitte Strategy practice and co-author of the Deloitte study “Navigating towards a 'next normal’ after COVID-19 - Lessons from APAC wealth managers. He has a focus on wealth and asset management, having served leading clients in Switzerland and across Europe. Christoph has deep experience in strategic initiatives, large corporate transformations, target operating models, organization & governance, as well as digitalization & innovation.

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Patric Niffeler - Senior Manager, Monitor Deloitte Strategy Consulting

Patric is a Senior Manager within the Swiss Monitor Deloitte Strategy practice and co-author of the Deloitte study “Navigating towards a 'next normal’ after COVID-19 - Lessons from APAC wealth managers. He is an expert in the Private Banking and Wealth Management industry and focuses on corporate and business unit strategy as well as strategic business model transformations. In recent years, Patric has been with Deloitte China to support the build-up and extension of the international banking practice in the APAC region.

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