The fruit of a collaborative effort between Credit Suisse and digital financial services provider Privé Technologies could well be a ‘game changer’ for Asia’s independent asset management industry, whose operational challenges — and AUM — mount by the day, representatives from both firms have told Asian Private Banker.
The solution, soon to be released in Hong Kong and Singapore, builds off Privé’s ‘private bank in a box’ product suite that has earned the firm plaudits for its plug-and-play nature and, at its heart, aims to deliver to IAMs in the region a private banking infrastructure that is paperless and does away with the need for mid and back-office support.
It also addresses the fragmented manner in which many IAMs interact with their respective custodian banks, whose electronic tools they typically rely upon in the absence of a single, unifying interface.
“We see IAMs working with around four-to-six custodian banks, which can lead to a number of operational challenges around consolidated portfolio management and advice, order management and execution as well as risk controls,” explained Sascha Zehnter, Credit Suisse’s head of external asset managers, private banking APAC.
“Through our collaboration with Privé, we aim to address those challenges by helping to develop the next generation of EAM wealth management technology solutions.”
For its part, Credit Suisse, which has taken up an equity investment with Privé and will derive some commercial incentives from the partnership, brings to the table its know-how and services spanning content, risk profiling and suitability, and order management execution.
However, the solution itself is run and operated by Privé independent of Credit Suisse and does not run on the bank’s software and data centre.
Further, data flowing from IAMs that use the solution will reside solely with Privé and out of Credit Suisse’s reach. And this is where things become more interesting, according to Charles Wong, co-founder and co-CEO of Privé Technologies.
“If you talk about multiple custodians, you must concern yourself with bringing in all the information and aggregating at a high level — but how do you make sense of it for the end-client?” Wong said.
“It is clear to me that the comprehensive gathering of investment intelligence for the underlying IAMs will be crucial. This has traditionally been a tedious process but I do believe in the next one or two years, most of the banks — and once we really prove this collaboration is working — will also come to the realisation that they need to spend the effort to provide that digital connectivity.”
Wong said that, in time, he expects the solution to function akin to an ‘app store’ for private wealth management services, whereby other players will use the platform to offer their own product and services.
Previously working in larger financial institutions, many EAMs have high expectations when it comes to technology and processes. Building a comparable digital infrastructure in-house requires a significant amount of investment and resources.
“Hence, our collaboration will ensure a smarter experience across different custodian banks with a smaller price tag,” said Zehnter.
Recent research from Asian Private Banker found that while 74% of IAMs in Hong Kong and Singapore use digital platforms in their daily operations, their application of technology across major task areas is uneven.
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Moreover, the majority of third-party tools available on the market are limited in terms of their breadth of functionality, with many focusing on consolidated reporting and simple portfolio management capabilities, according to Werner Schlossmacher, head of platform management APAC at Credit Suisse.
“Whereas most vendors remain desktop-based and connectivity to custodian banks has always been an issue, we plan to offer the same experience to EAMs as if they would be working at a private bank with the ability to manage electronic execution, portfolio management, and content to ensure tailored advice to their clients,” Schlossmacher said.
All the while, end-client expectations around digital engagement and accessibility are raising the bar for wealth managers in terms of how they articulate and demonstrate their value proposition.
Former private bankers may succeed at bringing across clients to a new setup on the strength of a relationship, but may often have a limited understanding of acquiring new clients and, fundamentally, how to grow the business beyond an existing client network, noted Privé’s Wong.
“They just expect clients to walk in or to be able to hire new RMs to bring in clients. But we all know that in this digital age, understanding how to engage clients digitally is crucial, and we want to make sure this happens via the collaboration,” Wong continued, highlighting the solution’s strategic optionalities that are atypical of other tools currently available.
Access to the solution will not be limited to those IAMs that use Credit Suisse as a custodian, nor will Credit Suisse’s IAM clients be compelled to onboard it, although those that do are likely to benefit from certain connectivities that do not exist with other banks. Further, both firms believe that as adoption gathers steam, other banks will be compelled to up their services to an intermediaries market that will continue to pare back the number of custodians they work with, as has been the case in Europe.
“And we believe that as private banks raise standards to the level that Credit Suisse and Privé have set, everyone can benefit from an inclusive and digitised ecosystem in wealth management,” said Wong.