J.P. Morgan’s private bank is likely to let its wealthy clients use its app for transactions and trades, although when is not clear.
Kam Shing Kwang, CEO for private banking in Asia, says the firm is increasing its investment in client-facing technology.
“You need to keep up or you won’t be the leader,” she said. Traditionally private banks have relied on their people, for high-end service, and on products for wealthy individuals or family offices. But now technology is a third must-have, she said.
This involves work in three areas. One is for operational efficiency, including client onboarding. Another is the client experience, which includes good U.X. to deliver statements, information, research and investment ideas.
“Technology allows our R.M.s to focus on client advisory,” rather than chasing clients for paperwork on onerous things like tracing the origins of wealth. Moreover, digital delivery means clients can obtain account and portfolio information 24/7 on demand, rather than waiting for periodic printed statements. Reports can also be customized and infused with analytics.
“Tech doesn’t mean we go back to the good old days: it’s better than that,” she said.
The third area of digitization is product innovation, using artificial intelligence and big data to serve clients better intel or products. This favors banks of J.P. Morgan’s scale, as its investment and corporate banking arms, as well as its asset manager, will also interact with clients. (Kwang also noted J.P. Morgan, as a group, has a $11 billion annual technology budget – “As big as any tech company’s”, she said.)
Next for innovation
A lot of this is not new: banks have delivered information online, but mainly via desktops. The bank is now investing more in mobile delivery.
One place this is all headed: letting clients use the bank’s app to transact and execute trades. Kwang didn’t comment further on this point but says it’s the likely direction.
Tech doesn’t mean we go back to the good old days: it’s better than thatKam Shing Kwang, J.P. Morgan
The other area the bank is investing in is artificial intelligence. As a start, J.P. Morgan is using data to better understand what kinds of products, asset classes or research topics clients is interested in, so R.M.s can introduce them more relevant ideas. (This extends to understanding clients’ habits like what time of the day they usually engage with the bank’s app, so R.M.s know when is best to get in touch.)
Second, the firm is looking at using data to create products, ranging from trading and execution, to building quant portfolios, to robo-advisory.
And third, the bank is building data on how clients invest: across geographies, by client age, or by their backgrounds.
The limits to technology
“In aggregate, this is powerful,” Kwang said, noting that some of this remains in development. She says, however, that it is not actually that new: it’s just a better-honed version of what R.M.s have done intuitively.
“Say a client comes from the shipping industry,” she said. “There are investments that have a cyclical or a correlated relationship. So what should a portfolio for this client look like? A.I. means we can be more precise and detailed in our offerings.”
Robo is less obvious in the context of ultra-wealthy clients (from $25 million of liquid assets, into the billions). “But it will play a part.” Chase Private Bank, the firm’s brand in the U.S., already offers robo for retirement plans of business executives who are rich but not in the tycoon class.
“Ultra needs to remain very high touch,” Kwang said. “But product is still important.” And that means using technology to build more bespoke offers, at scale, particularly on the group’s asset-management side.
There are limits, however. DigFin asked about Credit Suisse’s work with fintech Canopy, aggregating client portfolios onto one dashboard so they have a holistic view – one that they might share with the bank.
“We’ve done the same thing, but not through software,” she said. “It’s by building trust.” She says it’s appealing to allow clients view everything online, but notes that clients sometimes do this by themselves anyway. “That kind of tool won’t get clients to share their information with a bank; trust will.”