The top-line numbers for Asian private banking suggest that no single firm is especially trusted: about 85% of high-net-worth assets from the region require client permission to execute transactions, while only 15% are handed to banks in the form of discretionary mandates. Moreover, the typical ultra-wealthy person spreads their assets across five or six banks.
That suggests that leading banks each have less than 10% of a discretionary wallet share for a given Asian billionaire.
“You’re doing a good job [as a private bank] if you have 25% of wallet share,” said Francois Monnet, managing director for Credit Suisse’s private-banking business across Asia Pacific. “Fifty percent is exceptional. This is our core business, so we are closer to 25% than to 10%,” he claimed.
Wherever Credit Suisse is on that spectrum, Monnet has been leading an initiative, known internally as the Digital Private Bank, to use technology to upend this status quo and outperform the competition.
Increasingly that means mobile solutions: last month the bank rolled out a capability with Apple Chat, which it calls CS Chat, to enfold customer communications, including aggregate portfolio information, within the bank’s electronic platform.
“The purpose of using digital as a service provider is to become part of the client’s everyday life,” he said. “We need to create a sense of addiction and belonging…This increases engagement and raises the switching cost. How many software apps is a client going to learn how to use?”
To ensure one of those few apps is Credit Suisse’s, Monnet says the bank has to provide services that rich clients will pay for. He defines those as convenience and “orientation”, which is advice, although this could range from nudges to more complete decision-making. And all of this has to be deliverable via mobile, “to help the client take better financial decisions,” he said.
To make this work involved defining customer pain points and segmentation. Traditionally, private banks tier clients by assets under management. But in the digital world, Monnet says, that metric doesn’t help the bank add value.
Instead the bank segments customers by their attitude toward investing: “traders” who want a brokerage model, “delegators” that have the competence to award discretionary mandates, and “validators” who want control over their portfolios but need advice. Monnet says in Asia, there are few delegators but many validators, which means there’s a lot of work to be done by relationship managers in terms of conversing with clients and providing them with information and views.
Therefore a lot of the work of the digital private bank has been to support RMs so they can more effectively disseminate the full range of the firm’s research and trading ideas.
“We didn’t build an ING Direct,” Monnet said, referring to the online brokerage. “This is a multi-channel strategy that lets the relationship manager have round-the-clock engagement.”
Monnet has been with Credit Suisse for 12 years, including stints as CEO for Southeast Asia, regional COO, and now CEO for Hong Kong and head of Greater China, in addition to his regional role running private banking.
Although that has all been relevant experience, he has also been informed by his stint running Eastman Kodak for Asia. “I know what it’s like to be disrupted by digital,” he said. “You have to ask yourself: do you make the products and services that you can, or that you should?”
As a result, when developing the digital bank, he only worked with clients, rather than letting the bank’s other business teams get involved. The digital bank’s first iteration offered online views of customer market positions, portfolio returns, available cash, and trading tips. It’s all to give clients enough information to make them use the app all the time.
Since then the firm has added Canopy, a scraping service provided by Singapore-based fintech Mesitis that aggregates customer portfolios across banks; and now CS Chat, which embeds communications, including client onboarding and transaction orders, via WhatsApp. The service has debuted in Hong Kong and Singapore, and will be extended to other major booking centers. Tencent’s WeChat will be follow, but some 90% of clients use Apple devices, and therefore most are on WhatsApp (which is owned by Facebook).
The operating model
The missing ingredient is using client behavior to create feedback. “We have not a full job with the operating model,” Monnet said, which he defines as how relationship managers fully leverage the opportunities created by technology. This is not a question of cost – it is the least expensive part of the process, he says – but it is the most complex to integrate into the private bank’s processes.
Over time he wants to use client data to provide them with more context around the bank’s research, including via video. RMs need to be trained to interface this way, which sounds simple, but it’s not: the RMs need headsets, camera training, the ability to share documents during a call, and be situated in a studio with the necessary branding.
“We need to retool the RM to be like an actor in a world where information can be given automatically,” Monnet said. “The last mile of optimization is not a new tool, but a new way to service the client.”