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Avaloq’s Asia head: We’ve moved away from ‘monolithic core engines’ to open technology, customisation, personalisation

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Imad Abou Haidar was named head of Asia for Avaloq in August 2019. The firm needs no introduction, but even so, it is taking concerted steps to remain one step ahead of a competitive field of firms that provide core digital solutions to private banks and wealth managers. As such, the Avaloq of yesteryear is very different from the Avaloq of today and tomorrow — albeit with the same mission to future-proof its clients. Haidar, in his first media interview since joining Avaloq, discusses with Asian Private Banker the firm’s strategic focus in Asia, key developments in its solutions suite, and the role the region will play in the Avaloq’s future.

Imad, congratulations on your recent appointment. What attracted you to Avaloq and the business of providing core solutions to private banking and wealth management firms?
The first important factor was Avaloq’s focus on quality, on the product, and the long term. When I started talking with Avaloq, this really came through in every conversation we had. The second was Avaloq’s focus on the region. The company may be Swiss, but it has maintained a presence in Asia for over 10 years and is eager to expand in the region. We can be considered ‘local’ in many countries in the region, but we want to become even more ‘present’ in Asian geographies.

Avaloq’s business ‘wins’ in Asia over the past 18 months have tended to involve domestic onshore banks in the ASEAN markets that have growing — but not yet mature — wealth management offerings. Is this indicative of Avaloq’s business strategy in this region?
Of course, you will still see the focus on the large offshore markets at the global level, but more and more, we are seeing growth in onshore wealth management markets, driven in part by regulators seeking to retain wealth in their economies. Accordingly, many regional wealth management players in Asia are equipping themselves with world-class technology and services for HNW and mass-affluent clients. That explains why, in the last six months, we have won new clients in two new geographies in Asia.

Just how different are the initial conversations Avaloq has with regional onshore banks that have little experience in wealth management, compared to those with large, global private banking players?
These banks are typically leaders in their domestic spaces on account of their strong retail or corporate banking businesses, so they already have a solid customer base. And it is true that private banking or wealth management may be something that is relatively new to them. But they do tend to be extremely ambitious and, by virtue of having a clean slate to work from — from a technology standpoint — they are often in a position to leapfrog others quite quickly. Furthermore, having not much in the way of legacy technology means that our BPaaS and SaaS offerings are extremely relevant to these banks and, in fact, a key differentiator for Avaloq in Asia.

[Regional banks] tend to be extremely ambitious and … from a technology standpoint, they are often in a position to leapfrog others quite quickly

Relevance, as you suggest, is key. To that end — and beyond BPaaS and SaaS — what are some of the more important investments Avaloq has made to remain ahead of the curve?
We like to think in terms of bringing ‘simplicity in a new era’. What does that mean? On one hand, we aim to remove the complexity of running industrial processes that, at times, must run on a 24/7 basis with 100% availability. This is while providing our customers with the right tools, whether web or mobile, to build the right services for their own clients. One example is Avaloq Engage which, as the name suggests, enables RMs to engage with their clients via instant messaging, which is again a differentiator because we are endeavouring to help RMs interact as they would in the field.

At the same time, we have been investing heavily in APIs and microservices so that our customers can connect technology that they or their partners develop. We are, in a sense, an enabler for our customers to benefit much faster from fintech innovation. In fact, we have moved away from those monolithic core engines — where, whenever you want innovation, you would need to do an upgrade that could take up to 12 months — to a situation where we have this open technology and a matter of weeks or even days for end-clients to benefit from the innovation, or for a bank to launch a new product or portal, or to upgrade a portal with new capabilities.

[We] have moved away from those monolithic core engines — where, whenever you want innovation, you would need to do an upgrade that could take up to 12 months

How important is this speed-to-market and agility from the end-client’s perspective?
The average end-client today is extremely savvy in terms of technology and therefore has high expectations. Look at the way we all use smartphones and how we expect regular upgrades, new features, and new functionalities. We want things to be real-time fast, we want information on-demand. We don’t want to be searching in menus. So all of these expectations can be addressed through APIs and microservices. What we are doing is enabling our customers to make the most of our innovation, their innovation, and third-party innovation.

Are personalisation and customisation items that Avaloq’s new banking customers in Asia are eager to explore from the outset, or do they tend to prefer the off-the-shelf solution and explore options further down the line?
It is extremely important to have an off-the-shelf solution, but the value-add and the customer journey differs from one bank to another. So the ability to make sure that the solution provided is aligned with the bank’s own client journey framework is key. And at the same time, this should not take one or two years to deliver — especially considering the investments they have made in the solution. Our customers are anxious to start using the platform in the shortest time and want the fastest return on their investment, so this degree of flexibility we bring is highly valued.

Our customers are anxious to start using the platform in the shortest time and want the fastest return on their investment

The wealth management industry is going through a significant transformation, particularly in the way clients are engaged in terms of life goals and stages, client product preferences, and regulatory tightening. How do these changes inform Avaloq’s approach?
We have to remain extremely close to our customers to make sure that they are at the forefront of the innovation and at the forefront of those new trends. You mention investment preferences: alternative assets, sustainable products, even digital assets. These are all key topics that we support.

But with this type of technology, what we see today is the result of investments that happened 12 or 24 months ago. We have a global team within our product organisation that remains in close contact with our customers across the world.

And I must admit that a lot of our innovation originated in Asia. So our product team in Asia is the channel to influence our innovation roadmap. In many cases, a customer’s requirements depend on the market or geography they are in. If we look at ASEAN, there is a lot of first-generation wealth and business owners who are tech-savvy and, perhaps, more interested in taking on higher risks or investing in alternative and digital assets. We need to ensure that the innovation we are generating is aligned with regionally-specific needs.

So it is no longer a case of ‘one size fits all’, or that R&D solely based in, say, Europe. In fact, Avaloq Engage, the product we are launching right now — which includes a mobile app that enables an RM to interact with the client via WhatsApp in a secure and compliant manner — originated out of an idea from Asia. It’s fair to say we are moving towards a situation where we get our ideas from everywhere we work and then develop globally.

[We] are moving towards a situation where we get our ideas from everywhere we work and then develop globally

The importance that Avaloq places on being an enabler for its customers to design their own experience and client journey, and the role that third-party providers could play in this sense, is partially addressed by the Avaloq.one marketplace. But just as we have been speaking about innovation coming out of Asia, Avaloq.one is still dominated by Swiss and European fintechs. Can we expect to see more Asian firms coming on board?
This is one of our areas of focus. Yes, we will have more Asia fintechs joining the Avaloq.one Ecosystem. I would also point out that over the past five or so years, we have increased our software development team in the region. In Manila today, we have around 300 colleagues, mainly working on software development within our chief product and chief technology organisations.

While not directly related to private banking, both Singapore and Hong Kong are issuing digital banking licences. What does this mean for Avaloq’s business opportunities?
We are closely following these developments and we are in discussions with a number of these consortiums from a perspective of wealth management and mass-affluent banking. The focus on this market segment is an essential aspect of our strategy for the region. As long as they are operating within an area where we provide the best solutions and services, we will explore this opportunity

Finally, what can we expect to see from Avaloq in Asia in the near-term under your leadership?
We have a large number of projects happening at this moment, so the first focus is on supporting our existing customers and bringing them up-to-speed. The second focus is on increasing market share within the region. We have a presence in Singapore, Thailand, Malaysia, Hong Kong, the Philippines, and this is growing. And we will continue to add new geographies. We are launching initiatives in mainland China and Japan in the next 12 to 24 months. These are significant investments and demonstrate how we operate with a long-term mindset. It is a mindset that prioritises building a solid base and deep relationships.

We are launching initiatives in mainland China and Japan in the next 12 to 24 months.

Very quickly, on that last point, given that your business demands considerable investments in time, resource, and capital, how difficult is it for you to ‘flip’ an established relationship between a major competitor and customer?

These kinds of investments by banks need to be made from a long-term point of view and must be future-proof. The partner that a bank chooses to work with must be investing in the technology and the people in order to remain in a position to offer the right products and services. We have spoken about our ability to accommodate digital assets, alternatives, sustainable investments, advanced derivative products, we made an acquisition of Derivative Partners — all of these things are correlated and we wouldn’t be able to offer the solutions we do if we hadn’t invested 20, 24, sometimes 36 months before even seeing the first customer or the first dollar. So this is a business based on long-term trust and facts.

We have very long relationships in this region with customers who trust us and we reinforce that trust with our delivery. But when an institution enters into a relationship and then five or ten years later, that partner decides to do something different, this is when we can flip a relationship.

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