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The growing role of External Asset Managers
How do External Asset Managers adapt to the new reality?
External Asset Managers’ (EAMs) entrepreneurial structure makes them particularly resilient. They know how to be flexible and agile, and how to anticipate new challenges. For example, as we’ve seen, many of our partner EAMs have been able to implement the necessary changes even before the new supervisory legislation and regulations came into force.
It is equally crucial for EAMs to be able to take full advantage of technological advances and to anticipate their economic impact, so as to adapt their business models. Digitisation offers differentiation and added value, whether for the client experience or in efficiency gains. In this regard, the quality of partnerships with strong and innovative custodian banks is a key asset.
The regulatory environment is becoming increasingly stringent. Where do you see opportunities for growth for financial intermediaries in Switzerland?
The new legislation and regulations should, in fact, bolster the sector in the long term, according to the Swiss Financial Markets Supervisory Authority1. The Federal Financial Services Act and the Federal Financial Institutions Act2 will give the profession much-needed recognition, providing EAMs with a solid framework within which they can evolve much more smoothly. More than 2,000 EAMs and several hundred trustees have declared themselves, pursuant to the new rules. Doubtless there will be obstacles along the way, but we will continue to support our customers and partners during this crucial transition phase.
Looking beyond Switzerland, which region of the world has the strongest growth?
We are seeing a strong resurgence in Europe, and business is picking up steadily in Asia. Our international offering is based on the Lombard Odier Group network, namely our banks in the Bahamas (Nassau), Europe (Brussels, London, Luxembourg and Paris), Bermuda (trusts and accounts related to our trustee activities) and Asia (Singapore).
What has changed in terms of the way in which services have been provided to international customers in the past few years, and what have been your factors for success?
Since 2020, banks and EAMs have had to digitise many of their procedures. While this has been a real security challenge for our industry, digitisation has paved the way for new international opportunities. In terms of factors for success, I would point to our unique G2 banking platform, which has been deployed across the Lombard Odier Group. It gives EAMs and their clients the possibility of making deposits from a number of booking centres around the world. This sets us apart, since few banks offer a single tool covering all their deposit facilities. It increases operational efficiency, whether in terms of account consolidation, order placement or even portfolio analysis.
EAMs are increasingly working remotely. How do you respond to their needs?
Lombard Odier has always provided EAMs with a wide range of fully autonomous remote tools. The G2 system is a genuine “Swiss knife” for portfolio management, and makes it possible for our EAM partners to manage their customer portfolios entirely independently. It makes it easy for them to trade, analyse and consolidate their customers’ assets. G2 ensures transparency, which is essential in this industry, and makes sure that customer interests are best-served.
Which areas do you see as having the greatest potential and most advantages for all the sector’s stakeholders?
I believe that we have made productivity gains, and created more synergies with EAMs, by reducing the burdens imposed by the array of regulations as much as possible. We are convinced that partnerships and collaboration are key to this. That’s why we’re investing in and teaming up with the FinTech and start-up sectors to co-create innovative solutions for EAMs.
For example, we’re working with the Geneva Wecan Comply platform, which facilitates exchanges between banks and EAMs. Given the scale of the challenge several banks have joined the initiative: streamlining processes, reducing the compliance workload, sharing information in real time and exploiting blockchain technology. New worlds are opening up with great potential.
1 Swiss Financial Market Supervisory Authority (FINMA)
2 Federal Law on Financial Services and the Federal Law on Financial Institutions
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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