Steven Lo, regional head – Asia Pacific, Citi Private Bank shares his views with Asian Private Banker in ‘The Final Word’, a year in review by the region’s private banking leaders as they share their thoughts and opinions on key issues around industry trends, business performance, investments, regulations, and technology.
Industry Trends | What is the single biggest challenge and the single biggest growth opportunity for your business today?
I see a big shift in the industry in which some might see as a challenge, but we see as a unique opportunity. Clients are increasingly looking for banking relationships that serve a wider range of their needs — to address not only their personal wealth but also their business requirements. In addition, clients are becoming increasingly global in their perspective with regards to their business, investment outlook, family, and lifestyle. Thus, platforms that can offer personal wealth management as well as corporate and institutional capabilities, and are able to connect all these interests seamlessly around the world, are in the best position to serve these “global citizens”.
Business Performance | Productivity and efficiency matter more than ever in this environment. Over the past year, what key steps have you taken to improve both the productivity and efficiency of the business and, to date, what has been the impact?
Focus is key with regards to promoting productivity and efficiency. We have a strategy where we look at our resources and decide how and where they can be put to the best use. We don’t assume that our resources are infinite and therefore we impose great discipline in the allocation and use of them. It has allowed us to focus on key markets, managing them from strategic centres — Hong Kong and Singapore. We are also strict about our target market where we focus on the upper tier of the wealth management spectrum. As a result, we have found that we can serve this particular segment in a more comprehensive manner as we sit in the part of the bank where we can leverage the broader capabilities of the Citi franchise in service of their wider corporate and institutional needs.
Talent is another area where we have taken particular focus in terms of development. We found that going out and paying large packages to people before they have even proven themselves in the organisation is a losing proposition. As our group culture is strong, we have found that hiring within the organisation has been fruitful, eliminating the need to adapt to a new culture, even though an individual is moving from another part of the bank. We have also taken great steps in hiring junior staff and fostering their development through training and rotational assignments. This has shown more positive results for the firm and has provided rewarding career paths for our staff.
Investments | What are the key investment themes that your private banking will focus on in 2020?
Asset allocation and risk management remain the drivers of our investment outlook for 2020 following the dispersion of asset class and market performance in 2019 and the impact of short term news flows, which will continue to dominate the investment dialogue. We are closely examining the strong fixed income returns we saw in 2019 and the prospects for the asset class. Many of the strongly performing areas of fixed income are unlikely to see the same sort of returns and the request for yield — both from fixed income and other assets — will continue to dominate many investors’ minds. Within equities, we remain laser focused on valuations, corporate balance sheet strength, earnings growth, and dividend-growing names, as well as the implications of geopolitical tensions. We continue to focus on what we call “unstoppable trends” — the widespread impact of disruption in all major parts of the global economy, which is only just starting to be understood. In addition to the careful utilisation of risk mitigation structures, we continue to have a major focus on low-correlation hedge funds, plus the selective deployment of capital in select illiquid assets such as private equity, private debt, and real estate.
Regulations | How has your private bank responded to regulators’ increased emphasis on building proper banking culture?
Citi houses a culture in which it is everyone’s responsibility to exercise good judgement and have accountability. This is at the heart of the company’s values. These are vital to our reputation because without a good reputation, you are of no value to anyone. That is why there is no room for compromise when it comes to ethical behaviour. We expect that from our staff, the vendors we work with, and the clients we deal with. Our continuous training is a constant reminder about the importance of proper behavior as well as its consideration in all our employees’ scorecards.
Technology | If we can agree that effective private banking relies on banks having a deep understanding of client needs and behaviours, how are you leveraging tech and data to deepen this understanding?
Technology plays an important role in providing clients with timely access to information and analysis. It is also an efficient means of communication. However it will not replace the value that a live face-to-face conversation can have especially when dealing with more complex issues and situations, which is more often the case for our client base. There is no doubt that machine learning could assist with some of this analysis but it cannot replace the subtle cues and inferences that accompany a live meeting.
However, we do appreciate that the next generation is more comfortable leveraging the use of technology and we are looking at ways to weave that in with the “personal touch” that still has value — even for them. We understand that having technology for the sake of it does not make sense. So our development focuses on the technologies that enhance client experience. It must be easy to use and navigate and has to add value for the client.
Meet 2019’s industry leaders in the full round up of of Asian Private Banker‘s The Final Word 2019.