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How embracing adaption keeps us close to the client
'The Future of Swiss Private Banking, can Switzerland Survive?’ That is what the British Swiss Chamber of Commerce challenged Alexandre Zeller, Managing Partner Lombard Odier Group, to discuss on December 4 in Zürich.
His response? The Swiss banking industry will flourish in the future as long as it continues to anticipate change and provide value-adding services to clients.
“Private banking is no different from other industries,” he said. “It is critical not to miss any important developments in our industry, and to closely look at the core trends that are reshaping the industry.”
No guarantees
In recent times, many well-known names, such as Thomas Cook in the UK, have disappeared. This brings to mind companies like Kodak, which failed to anticipate the advent of digital photography, and Nokia's inability to grapple with changes in its industry, the audience heard.
So at a time when many household names across a number of different industries no longer exist, there are no guarantees, Mr Zeller said. It is a point that Lombard Odier has internalized – as a firm with a history spanning back 223 years, and having navigated over 40 crisis, that rethinking the world is the way to remain relevant.
Spotting the trends
In private banking, the most important trends which have emerged surround new regulation, technology, a changing customer base and transparency. These come at a time when there have been declines in revenues because of changes in the market and increased costs. “We live in a special period,” he said, “when clients at a government level are being paid to borrow money”.
As an example he stated that “The Swiss Government can borrow money at a negative interest rate. The same now applies to the mortgage market in Scandinavia. More broadly, and with interest rates at record low levels for corporates, it means that the risk is not being paid and it pushes a lot of actors to take risks they would not be taking if interest rates were at a higher level.”
How to navigate these difficult times is by successfully dealing with the four trends he highlighted.
From regulation to demographics
Changes in regulation since the 2008 financial crisis has affected Swiss banks but have helped increase professionalism and have created a higher barrier to entry. At a time of low interest rates, new strategies need to be found. Therefore, banks and financial centres need to be repositioned with an emboldened vision to remain relevant to clients and flourish.
“We also need pragmatic regulation and a good working relationship with the regulator. For private banking clients, the most important factor is a solid and reliable legal framework."
Changes in technology have meant new entrants can try and disrupt the system but they come in without clear positioning and need to establish a client base, meaning they can therefore disrupt only part of the value chain. Clients are also now better informed about products and prices, said our Managing Partner, and this transparency means that wealth manager’s must add value and offer unique expertise to clients. In addition, protecting client data is of the utmost importance, he said.
“What we need among all in technology is skills. We need to invest in education. Companies have a role to play to support and continue investing in employees and offering apprenticeships,” he stated.
Technology also offers an opportunity for private banks to enhance their efficiency, such as having common payment departments between banks, and resources could be bundled. “We need collaboration between banks in some areas,” Mr Zeller told the audience. “Otherwise, technologies will disrupt the industry. No bank, even the largest, can continue to do everything. Each bank must therefore focus on their unique client proposition which adds value to the clients.”
Changes in demographics now mean a younger, more diverse and increasingly entrepreneurial client-base, all of whom expect a technology-strong service. For bank this means they need to have a focused market strategy, decide which client segment to serve and what kind of interaction they are going to have with them, said Mr Zeller.
No one way
“There isn’t one solution he stated but if we are collectively able to address the key trends that I have just listed, I strongly believe we (as an industry) can remain very successful," he said.
At Lombard Odier, the bank has focused on 16 key markets, aiming at successful entrepreneurs with sophisticated requirements using a unique system centred around human interaction but with a highly developed technological edge. ”We are a premium, client centric and high value-add firm where trust, entrepreneurship and sustainability are at the heart of what we do”, he said.
As an investment house our primary objective is to ensure we help our client protect and grow their wealth. “We are convinced sustainability isn’t a threat for the future, it is the future and this is why we build portfolios around Eagles, far-sighted companies committed to sustainable behaviours and growth strategies, to deliver superior returns for our clients”, Alexandre Zeller told.
Important information
This document is issued by Bank Lombard Odier & Co Ltd or an entity of the Group (hereinafter “Lombard Odier”). It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a document. This document was not prepared by the Financial Research Department of Lombard Odier.
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