The pandemic has sparked dramatic changes in the wealth management industry.
As markets plummet and liquidity dries up even the most sophisticated investor can be shaken. That’s when they will call upon a trusted adviser, whether to seek short-term tactical advice or simply to be reassured that their diversified portfolio is well-positioned for long-term growth.
But as markets reacted strongly to the coronavirus pandemic in March, lockdowns meant that face-to-face meetings – a key aspect of private banking – weren’t possible. That meant that private banks and wealth managers had to rely on digital tools to communicate with their clients, such as video calling or webinars to provide market updates.
Given their importance to the global economy, banks in general are well prepared to handle crises, with contingency planning a vital aspect of the business, says Masroor Batin, Chief Executive Officer of BNP Paribas Wealth Management Middle East and Africa.
In March and April, they saw a surge in use of digital communication channels, including from an older generation of investors less accustomed to using online tools than the younger cohort of Generation X and Y investors. “Many clients who felt that this was outside of their comfort zone in the beginning suddenly started to embrace it naturally and seamlessly, just because the crisis was pushing them to do so,” says Batin.
Working from home, travel restrictions and the shuttering of many real world businesses also focused attention says Batin. “Because a lot of those things that normally occupy clients were on standby mode, they had more time to talk with relationship managers, and the market volatility only accelerated the need to do it,” he says.
At HSBC UAE, the bank launched Zoom calls for its relationship advisers in private banking, Jade and Premier segments within nine days of the lockdown announcement, and five days later rolled out a tool to allow clients to sign documents and authorise transactions via email.
It is when they are facing difficulties that clients really want to talk to an adviser in person, notes Dan Robinson, Head of Wealth & Personal Banking at HSBC UAE. “With Zoom, our [clients] did not have to wait until it was okay to go back into a branch and meet with their relationship manager, they could do it there and then, which of course with high volatility in the markets is so important.”
“Throughout this whole period our advisers stayed close to our customers to support them. It’s in difficult times these relationships matter most,” says Robinson.
More than 220 years old, Lombard Odier, the Swiss private bank, is known for its tech savviness, and has even made a business out of providing IT services to other banking firms. The bank’s own platform can provide wealth management clients with a highly detailed overview of all their assets, show investment opportunities, and connect them with advisers and specialists.
In March, the bank saw the volume of transactions triple, and in April it was 50 per cent above normal traffic. The bank was able to add new functionalities, including digital onboarding and a tool for video conferences with up to 3,000 people.
“During this time our tech platform smoothly managed the situation, showing that technology is a competitive advantage for us,” says Guy Oliver Bambule, Managing Director of Lombard Odier’s Dubai office.
The main focus was to answer client requests “in a timely and wise manner,” says Bambule. “The best feedback we received from our clients was they did not see any difference in terms of banking services during the crisis compared to before the crisis.”
Mashreq rolled out major digital developments, including an email indemnity feature to allow private bank clients to send banking instructions electronically, says Vipul Kapur, Head of Private Banking. “This has helped clients in terms of convenience and seamless banking; the need to send physical instructions is not mandatory anymore,” he says. Digital tools allowed private bankers to connect with clients both locally and internationally. “It was a very successful way to reach out to our clients at their convenience and assuring them that we are here for them,” says Kapur. The bank used webinars to update clients on market trends and the outlook in orderto help them make informed decisions.
Wealth advisers also faced their own upheaval as suddenly employees had to adjust to working from home.
Dr Ryan Lemand, Senior Executive Officer at ADS Investment Solutions, a wealth management and asset management company in Abu Dhabi, says that while the first two to three weeks were tricky, “Today productivity among my team is better than when we were in the office, and on so many levels”.
Thev pandemic, although unprecedented, has offered a number of opportunities, from fast-tracking the technology to supporting the wellbeing, safety and security of our staff and customers, says Sonny Zulu, Head of Retail Banking UAE at Standard Chartered Bank.
A personal touch
One factor is the ease of digital communication: people find it easier to send a WhatsApp message than make a phone call, or join a Zoom meeting rather than schedule a formal meeting in their office, he believes.
He describes video calls as especially effective when providing market analysis to clients as graphs and other data can quickly be shared on-screen to show evidence for a particular thesis.
Talking with clients from his home office, wearing casual clothes rather than a three-piece suit, and seeing clients in a more relaxed setting has also made the connection more personal, he says.
Video calls Vs. Face-to-face meetings
As economies reopen, bankers are pondering whether the experience of the past months will result in permanent changes to how clients interact with their wealth managers. Bambule says that while video conference is extremely useful for serving existing clients, it will never replace face-to-face meetings, especially with new clients where there is a greater need to intimately understand their requirements and win their trust.
Batin says though it’s still too early to say definitively how expectations will be changed by the past months, he expects some measure of a permanent shift, putting the onus on banks to accelerate digitalisation of the client experience.
“What I strongly believe is that some of these measures which are put in place during exceptional circumstances don’t go away when the crisis goes away,” he said.
The pandemic, although unprecedented, has offered a number of opportunities, from fast-tracking the technology to supporting the wellbeing, safety and security of our staff and customers, says Sonny Zulu, Head of Retail Banking UAE at Standard Chartered Bank.
“This is especially true for online banking where digital adoption has been phenomenal for our customers. We timely implemented preventive measures across all our touch points and activated additional channels for client interactions, which included addressing their needs while working from home and introducing secured voice instructions. That we did so is a testament to the agility of our staff – those in, branches, customer service, call centres, IT and dozens of other teams who put all else aside to make sure we were there for those who rely on us.”
The question on everyone’s lips
“Shall I stay invested?”, is the most common concern for private bank customers as volatility rises, as at the end of Q1, says Vipul Kapur, Head Of Private Banking at Mashreq Banking.
“The short answer is ‘yes’. Trying to time the market by guessing its upwards/downwards movements could lead to missing out on attractive returns during the recovery period,” says Kapur. “In fact, due to enormous fiscal and monetary easing across the globe, equity and credit markets recovered significantly from the lows reached in March,” he notes.
Another important topic is wealth preservation, and diversification as the two important keys to building a resilient and risk-balanced portfolio in the current circumstances, says Kapur.
“We have clearly understood during the pandemic that only technologically savvy ones can survive. Banks that were not advanced enough in this sense previously had no choice but to adapt technology to get through the crisis. Same for clients: those who did not fancy digitalization were able to see how it can ease lives. I am constantly getting feedback on how productive working from home is and how technology really allowed bankers get closer to their clients.
Questions most asked though: Will employees return to the office? Can we keep them working remotely (at least partially)? Will we go along with online meetings?”