Mid-year PB Tech Snapshot: Regulations drive tech development in Asia PBs
Asia's constantly evolving regulatory landscape is driving the region's private banks to seek advisory solutions that provide clarity, address risk requirements and improve efficiency, according to a survey conducted by Asian Private Banker.
Specifically, technological developments in portfolio management services and product distribution platforms have emerged as priorities for Asia’s private banks, rising in the ranks to fall behind only account opening and client communication channels.
Affected by increasingly stringent account opening-related regulations, private banks in the region have endeavoured to assuage the pain points of KYC and client onboarding through technology, with lenders such as Deutsche Bank and LGT having revamped their account opening processes to shorten turnaround time.
Meanwhile, demand for product distribution technology has also grown, likely driven by the Securities and Futures Commission's suitability rules which call for reliable risk-matching solutions.
Ranking third on banks' list of priorities, portfolio management solutions are growing in importance as watchdogs encourage better alignment of client and bank interests via improved clarity and simplification of advisory services as well as amended disclosure requirements on the discretionary side.
On the mobile app front, almost one-third (29%) of respondents have rolled out advisory-related features, while a similar number are developing such capabilities this year and 14% intend to do so in the future.
Some of Asia’s private banks have developed flat-fee advisory solutions in-house, such as UBS which released UBS Advice — one of the first automated advisory solutions to enter the region — in 2014, Credit Suisse, which launched CS Invest to its Asia clients in mid-2017, and Deutsche Bank Wealth Management which recently joined the fray, rolling out dbXpert in May.
Meanwhile, portfolio management solutions are also beginning to gain traction amongst banks, according to respondents, 14% of whom said they already offer such features on their mobile apps, while 14% are currently in the process of adding portfolio management tools, and 43% intend to develop them in future.
As for digital RM productivity tools, most respondents (83%) indicated that they are currently developing portfolio analysis features, while the remaining 17% said their relationship managers already have access to such solutions.
The latter group includes DBS with its RM Mobility app, Bank of Singapore's RM Navigator, and Bank of East Asia's iPortfolio Analyzer. And in March, HSBC inked a deal to offer BlackRock Solutions’ Aladdin wealth platform with portfolio risk assessment features to its clients.
With growing cost constraints and increased competition in the form of virtual banks, accuracy and service quality could well be the predominant differentiator between banks, and efficiency gains driven by digital tools could provide lenders with a much-needed competitive edge.
Looking ahead, private banks in the region are seeking to leverage behavioural data to improve personalised advice and product recommendations. Overall, respondents said technology at their respective banks is 40% ready to carry out meaningful and efficient gathering of client data, with the majority of responses sitting between 19.5% and 50% ready.
The readiness spread illustrated below indicates that private banks are increasingly prioritising data collection tools and that this emerging trend is likely to strengthen in the near future.
