Customization as a success factor in the digital age

Article published in NZZ , September 13

Digitalization will make private banking even more personal and tailored. Thanks to their agile structures as well as their resource and financial strength, private banks have a decisive competitive advantage.

Personalized medicine is the epitome of modern healing methods. Therapies and drugs are precisely adapted to the needs of the respective patient. Tailor-made treatments are based on new diagnostic methods, such as molecular genetic testing. Data and intelligent technologies have become the most important tool in medicine. Treatment no longer follows the principle "one size fits all", but is "tailor-made", i.e. tailored to the individual. With a focus on the specific needs of individuals, personalized healthcare is as much a pioneer as a role model for other service industries. This also applies to modern private banking.

Demanding environment

Advising wealthy clients is becoming increasingly demanding, which can be seen in various trends and developments. Complexity has steadily increased due to increased regulation density, nervous financial markets and new investment products. There is no end in sight. Today, the private banker no longer has a real information advantage over his clients. However, the latter find it increasingly difficult to keep track of sustainable decisions in a flood of information. Times in which it was sufficient to segment the clientele only according to age, occupation, domicile and net assets are also a thing of the past. Rather, the challenge today is to understand the heterogeneous needs of customers across generations and to incorporate their interests and motivations into consulting. Wealthy private clients require investment expertise and ask questions from their contacts. They want to know what their bank thinks about global trends such as climate policy. From this they expect accurate conclusions for themselves and their fortune.
 

Wealth management is an industry with enormous potential. Today, global wealth is growing twice as fast as global GDP¹. Experts predict that the investable assets of wealthy individuals (HNWIs) will increase by 25% by 2021. Furthermore, they expect asset managers with a holistic, digital advisory approach to make a disproportionate contribution to this.

Personalization as a success factor

Technological innovation is generally not directly associated with a private bank. A mistake, because well-positioned private banks benefit from an agile organization, lean processes and the opportunity to invest in new technologies. Not to be underestimated is the open IT infrastructure, which makes the implementation of new systems much easier.

The key to success lies in the ability to apply new technologies in such a way that they deliver real added value to the customer. Customization is the idea behind it.

One example of this is the tailored use of investment funds across all asset classes in the portfolios of wealthy private clients. Selecting best-in-class products worldwide requires a highly developed platform. Once selected, the funds are adjusted to the individual portfolios. Without a technological platform, such strategies cannot be implemented.

Such services, embedded in a digital experience with intuitive, easy-to-use and aesthetically pleasing applications, contribute to bringing the user experience to an unprecedented level. Digitalization redefines this user experience and enables a more intensive customer relationship. It also frees the account manager from administrative tasks that do not necessarily have to be with him. This makes the business scalable and the consultant can better adapt to the individual needs of his customers. It is a prerequisite that private banking clients can deliver exactly what they need.

With digitalization, the potential of the interaction of personal consulting and technology-supported services can be optimally exploited. This affects the entire value chain: from smooth onboarding, individual investment proposals, reliable investment execution at all times to intuitively presented custody account statements including e-banking. This makes digitization an important differentiating feature in the tough competition, especially in the competition for demanding and digitally affine customers, the next generation.
 

Nevertheless, digitalization in the private banking business cannot stand on its own, but rather represents an, albeit central, expansion of the range of services with a view to the customer experience.

¹ Gross domestic product