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Pandemic drives PB demand for digital solutions to maintain business as usual

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Technology solutions digitising existing processes such as record keeping and client onboarding are gaining strong traction amid the global pandemic as they became essential to maintain business as usual in the private banks.

After speaking with PBs on how execution, advisory and client communication is done when face to face meetings have become impossible in most countries in the world, Asian Private Banker interviewed technology providers that are providing digital solutions for day-to-day business processes within PBs. They agreed that their solutions have become more sought after during this pandemic, because solutions that used to be just something “good to have” have become vital to maintaining the PBs’ daily business operations in a work from home (WFH) scenario.

David Brown, COO of IPC Systems, a communications and networking solutions provider for financial institutions, told Asian Private Banker that the demand for the firm’s remote trading solutions and voice order record-keeping solutions grew in Asia over the past few months and corresponded equally to other parts of the world as the virus continued to affect global markets.

The need for business continuity

David Brown, IPC Systems

“The overall usage level for our solutions is up 20%-30% globally. Beyond that, over the course of the virus outbreak, we have seen a 40%-50% increase in the sales of our suite of business continuity planning solutions,” said Brown.

More than two months into the global pandemic of COVID-19, the entire financial industry has been forced to adapt to WFH conditions for most staff. This mandatory lockdown changed attitudes of the traditional PBs which didn’t think digitisation was needed for such a “high touch” service industry.

“Across our community of 110,000+ users and over 6,600 market participants, there are still customers on legacy assets who cannot scale up quickly and aren’t fully enabled to provide for remote working,” said Brown.

The uptake of solutions by IPC Systems has been driven mainly by the PBs’ need to maintain business continuity during the global lockdown, he explained. Placing orders via phone remains a major channel to conduct trade of over-the-counter products in PBs.

Adaptive due diligence
Chiara Gelmini, business practice manager at Appway, agreed that PBs have changed their attitude towards digitalisation and have accepted it as a necessity. In Asia, PBs have been more open to adopting technology in their client journey than in the West.

In view of the worldwide lockdown, she pointed out that banks are making changes in daily protocols for onboarding and this creates the need for digital solutions that can ensure compliance during the remote interaction with clients.

Chiara Gelmini, Appway

“There are a lot of amendments happening to the internal department in the PBs because of this pandemic,” Gelmini told Asian Private Banker.

“Financial institutions have had to relax many policies almost overnight to turn risk management into adaptive due diligence in order to support customers and employees more flexibly, rather than forcing them to interact in a pre-defined way. Although policy relaxation will surely be short-lived, adaptive and outcome-based regulatory compliance is going to be a theme for quite a while.”

Regulatory recognition of digital onboarding
Gelmini pointed out that while the technology is capable of a fully digital onboarding process, it is only possible with the assurance of local regulators. She mentioned that in Switzerland the local regulator (FINMA) recognized a fully digital onboarding process for financial institutions two years ago. (The initiative started with an ordinance in 2016, and this was modernised in 2018.) FINMA asserted that a digital onboarding process is no less valid than an onboarding done face-to-face with clients physically visiting the bank, provided that financial firms meet certain requirements regarding online and video identification as well as electronic signatures.
This has allowed the private banking sector to establish new client relationships even amid lockdown situations, so private banks could continue acquiring new assets.

While banks in Asia are more willing to digitise various compliance and operational functions, it is crucial to observe local regulators’ guidance. In Hong Kong, for example, the Securities and Futures Commission in July 2019 launched regulatory amendments to facilitate the online onboarding of overseas clients. However, the industry remains cautious about the validity of online onboarding in private banking, because the onboarding process at PBs requires more in-depth information and verification from clients than when opening a retail banking account.

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