2020 brought a number of things to the forefront. Digital solutions, particularly as more started working from home, were a huge part of people’s lives in the year. ESG became a product of choice for many. However, are these trends blip or signs of wider change in private banking and society? Patrick Brusnahan asks the experts

What has changed in the world and will it ever change back?

The acceleration towards intelligent digital collaboration we saw at the beginning of 2020, brought by the global pandemic, will certainly continue in 2021 as wealth management firms and their clients will continue to see the benefits of digital collaboration.

How do you serve clients or prospects remotely and make the experience effective for relationship managers (RM)? Intelligent digital tools are now available and allow wealth and RM’s to deliver contextualised, personalised information to their clients – serving them more efficiently.

What stopped banks from doing this before? Security and confidentiality concerns related to in-person meetings were deemed better even if it meant the bank had less control. Now as banks turn digital, client and RM conversations are fully secure and, as they are also recorded, give banks the added benefit of providing full insights into the relationship whilst maintaining control.

Increased focus on advice and sales effectives

Covid-19 has brought two key points to the foreground:

• Increased appetite from clients for guidance and in particular in terms of advice on financial planning and investments – what happens to asset classes or stocks if a similar situation occurs again, how will portfolios be impacted?

• A question on how you acquire new clients when face-to-face meetings are not possible. This has helped to see who is better at opening doors and cross-selling to clients. Firms saw an additional need to embrace digital transformation, new ways to contact prospects, the ability to support remote acquisition processes and have tools to communicate value to new prospects.

ESG will become front of mind

Investment in ESG has taken the centre stage for different reasons:

• Upcoming European regulation is pushing most wealth managers to think hard about ESG and the EU Regulation on ESG disclosures will come into effect from 10 March 2021. It will require market participants and financial advisers to provide investors with certain ESG-related information in relation to certain financial products in order to enable investors to make informed investment decisions based on ESG factors, and

• Addressing personal preferences such as ethics in investments where you might be passionate about climate change, education, fair labour etc and having the ability to point to a specific element of impact you want to achieve as an individual. More differentiation through which winning managers will profile clients according to their passions and drive specific investments that help them achieve their goals. Technology now allows for this and can collect clients’ preferences, check information about companies to analyse their ethical responsibilities and track investments to ensure they follow the right criteria.

The private banking sector has had a few hard years. Despite assets under management (AuM) increasing, fee compression and rising costs have put a squeeze on margins; COVID-19 and the lockdowns have just compounded the problem for private banking as well as the rest of financial services. It seems a fundamental shift in the sector is needed.

There seems to be two main themes emerging from the lockdown. The first has been the move towards the safety of digital channels. Indeed, the need for a health safe model for not only investing, but for moving and spending money has seen a significant rise in the use of digital banking and investments. This is not however a new phenomenon, the changing demographics of the population looking for wealth management and private banking has seen the more technically aware generations of Baby boomers, Generation X and Gen Z becoming a more important part of the clientele, and with them, a desire for an ever-increasing digital service.

The second takeaway from 2020 has been the enforced working from home, while I see that trend reducing; I believe it will remain significantly higher than at any time before the COVID-19 lockdown.

Given all that, 2021 should be the year that the private banking sector starts the transformational journey, centred on the client experience.

The client experience needs to provide the client with new, interactive and easy to use digital services that are flexible and allow the client and bank to utilise a range of channels to suit the client and the bank objectives. The channels should range from self-service digital portals, through a “Robo” service augmented by Artificial Intelligence, to the hybrid model of part self-service, part “Robo” advice and real one-to-one communication and finally to the traditional face-to-face channels. Of course, these channels will all require digital capabilities to enable remote access, information sharing and expand the ways a client can communicate directly with a banker for advice and service.

Questions around the structure of data, the capability to integrate new digital channels, process constraints and organisational structure must be addressed before that journey moves on; COVID has taught us that clients fall on a wide spectrum of readiness and the need for flexibility and choice is becoming an essential element of the journey.

The start of 2021 should see an acceleration of that journey, with Private Banks looking at the current capabilities and identifying the transformational journey to a digitally enabled client-centric world.