Coronavirus set to force digital transformation
As workers worldwide are either recommended or told to work from home, industries with a sizable digital presence continue business close to normally.
However, private banking, with pride in its human touch and relationship management, will be behind.
American retail banks such as Capital One, JPMorgan Chase, and Citi have urged customers to use digital channels rather than head into a branch.
JPMorgan actually closed 1,000 branches, 20% of its total, and globally asked its employees to work from home. Wells Fargo did the same.
Private banking and wealth management has been talking about digital transformation for the best part of a decade now.
It’s finally time to see if they can put their vast amounts of money where their mouths are.
A fear of losing the human touch should not stop any private bank from embracing digital. Video conference is commonplace, chatbots are improving (and can deliver clients to a relationship manager if something detailed is required), and smartphones are ever-present.
However, with coronavirus now a pandemic, will firms get the chance to adapt and evolve?
Some may not need to invest in haste. Credit Suisse has just released its first quarter results as PBI goes to press and its profit has actually improved.
The Swiss bank revealed that its return on tangible equity exceeds 10% for the first two months of 2020.
Its pre-tax income during these two months is said to surpass the CHF1.06bn mark, which was registered in the three-month period ended March 2019.
Private banking revenues in Q1 so far have increased from a year ago. This was attributed to higher transaction revenues.
Furthermore, HSBC actually expects its billionaire client count in Greater China to increase by three times.
Of the private banking division’s $151bn in Asian client assets in 2019, nearly 75% is said to have been contributed by customers having assets of at least $30m.
HSBC Asia Pacific head of global private banking Tan Siew Meng said: “Even if 2020 is going to be impacted, the trajectory will come back.
“It will pick up again when business activity or when travel starts to resume. We are not concerned.”
Maybe HSBC is not concerned, but many private banks should not become complacent. They should utilise digital immediately. Even if the COVID-19 outbreak does not affect results, it could well destroy client relationships.
Editor, Private Banker International