Nic Dreckmann, Chief Operating Officer of Julius Baer, discusses how he wants to use trends in the tech scene for the benefit of the bank and its clients.
You are a Julius Baer veteran, having worked for the Bank since 2004. What has changed in private banking during this time?
Nic Dreckmann: It has become faster and more intensive. The 2007/2008 financial crisis resulted in a crisis of confidence, which led to tighter regulatory requirements for the industry. There was also a change in client behaviour, which can also be attributed to greater transparency in banking services and products. Lastly, new competitors entered the market and banks had to face up to this new competition. I’m referring mainly to major tech companies as well as the whole fintech scene.
What changed specifically in terms of client behaviour?
The level of transparency in the market increased, which means that clients can now compare the services of various providers in detail before even making the first real contact. Technology and digitisation have massively changed our lives overall. Client experiences in the digitised world also influence their behaviour towards banks. Clients want to read reviews and testimonials like those on Amazon or Trip Advisor before making a decision on which offer to choose. Their demands have clearly risen as a result – “anytime and anywhere” are no longer just buzzwords, clients increasingly expect this from us.
The user experience of clients with respect to Google, Alibaba, Facebook etc. has clearly also caused the financial sector to rethink its approach to digital services.
A while ago, it appeared that Julius Baer had lost touch with the digital innovation leaders. What is the current situation vis-a-vis the digitisation of the Bank?
That is a question of perception. We probably haven’t communicated our work in the area of digitisation and innovation as actively as we should have done up to now. This does not mean, however, that we have not been working on these topics or have even lost touch. Over the last five years, Julius Baer has invested over one billion Swiss francs in technology and intends to continue to do so in the future. These investments focus on the technological support provided to our clients and relationship managers. It is often forgotten that as a private bank we have a different business model to a universal or retail bank. The focus on private banking is also reflected with regard to our technology investments.
Is there enough pressuir on Julius Baer to digitise?
The user experience of clients with respect to Google, Alibaba, Facebook etc. has clearly also caused the financial sector to rethink its approach to digital services. We are therefore not digitising for digitising’s sake, but rather we are evaluating which innovations are useful and relevant for our specific value proposition. In other words, we do not want to be pioneers in all banking aspects, but very much, where it concerns private banking.
Isn’t that a risky strategy? There is no silver medal for second place in terms of digitisation. As the song goes, “The winner takes it all”...
This is definitely true for business models where the price is the main differentiating element in competition, e.g. with interchangeable products and services. In private banking, the complexity regarding advising clients and processing investment transactions has increased to such an extent in recent years that it is no longer possible for a relationship manager to keep track of everything using the traditional resources. This is where technology can be a massive help. I see the symbiosis between personal advice and technological support as not just a success factor for dealing with this complexity, but also as the ideal future model for private banking.
And how will you do this specifically?
We have, for example, developed the Digital Advisory Suite (DiAS). This so-called robo-assistant helps relationship managers to ensure the solutions they propose to their clients match their investment profiles and meet all of the regulatory requirements. We have also improved the way we directly communicate and interact with our clients. Our clients want to be able to approach us and be advised on a one-to-one and personal basis. At the same time, they also want to be kept up-to-date and use specific services regardless of the time or their location.
How is Julius Baer making sure that there is demand for its private banking services both now and in the future?
A wide range of elements come into play here. On the one hand, the personal factor in our sector remains key. On the other hand, the culture in private banking must be overhauled to encourage working together with partners. Fintech companies are a good example here. These companies frequently only focus on a very specific element of a banking process – i.e. payments, the granting of loans, and financing – and then attempt to develop a better user experience. This must be used intelligently. At Julius Baer, we are looking very closely at what today’s fintech companies are doing, and integrating individual services that are useful for our business.
What is the situation as regards Blockchain?
Blockchain is an extremely interesting technology. We have naturally been keeping a close eye on the developments in this area. The banks and other institutions that have a massive interest in being “first movers” in this field are currently investing the requisite funds in the research and development of this technology. For Julius Baer, the tokenisation of illiquid assets, for example, is an important long-term area of interest in which we also rely on the expertise of external partners. The announced partnership with the Swiss company Seba Crypto AG is a good example of this.
For Julius Baer, the tokenisation of illiquid assets, for example, is an important long-term area of interest in which we also rely on the expertise of external partners.
What role will start-ups play in Julius Baer’s search for innovation? And what is Target Insights really about?
An example here is the partnership with F10 – a Swiss fintech accelerator and incubator – which has been in place since 2016. This collaboration allows us to keep pace with the trends in the financial services sector and at the same time fintech companies can support us in dealing with selected challenges. Target Insights is an example of this. Within the scope of the collaboration with F10, our employees have developed a system that can help us to identify and respond if a client is unhappy.
How does this work?
By analysing a large amount of data, we have identified patterns that allow us to make predictions in this regard. We want to make this information available to our relationship managers in the future.
What is Julius Baer doing to improve the client experience on the “Digital Journey” in private banking?
First and foremost, we need to be in touch with our clients in order to identifying their needs. We regularly ask them with which aspects they are satisfied and with which they are not, as well as what we have to change or improve. As you know, we have 1,500 relationship managers around the world with whom we discuss a great deal of ideas and experiences. The main priority here is to listen to them carefully, as they are the people who work closest with our clients.
And where specifically are the problem areas regarding the “Client Journey”?
At the moment, we are able to communicate digitally with around two-thirds of our clients. Despite this fact, a large number of business processes still require a physical document to be signed. This is, above all, tedious for our clients. The main aim now is therefore to integrate digital signatures and develop our digital communication to such an extent that we can finalize legally binding transactions without the need for paper documents and couriers.
How satisfied re you with the effort made by Julius Baer in implementing digitisation?
Digitisation and innovation are not topics that can be left on the backburner. We are constantly striving to further our development and improve ourselves, but still have a long way to go. I believe, however, that we have correctly identified where we want to be and how we want to achieve our goals. All that is left to do now is put these plans into action.
About the interview
This interview was originally published in ’Netzwoche’ on 26. May 2019