I attended the inaugural Geneva WealthTech Forum (https://tsfc.ch/event/geneva-wealth-tech-forum-2017/) in Switzerland last week. As well as moderating a panel (more on that later), there were two main reasons to take part:
- We were pleased to see a Swiss initiative focused on WealthTech
- Because the event was supported by the Genevan government
The forum was organised by The Swiss Fintech Convention (www.tsfc.ch) jointly with Synergy Asset Management (www.synergy-wealthgroup.com) and with the support of the State of Geneva and its Department of Economy, Security and Innovation (www.ge.ch/organisation/departement-securite-economie).
Why is it important for Geneva (and Switzerland) to engage with WealthTech?
The Deloitte Wealth Management Centre Ranking 2015 estimated that Switzerland managed $2 trillion in assets under management at the end of 2014, well ahead of countries such as the UK ($1.7 trillion), US (USD1.4 trillion) and Panama and the Caribbean ($0.9 trillion). Geneva, alongside Zurich, is the home to much of those AUM and thus a world leader.
Marry that international leadership profile with the reality that technology is an increasingly central aspect of the wealth management business model and Geneva engaging with #WealthTech is important. For a centre like Geneva to push itself to engage with change is important, as well as necessary. Indeed, it must be for these centres to understand, engage and show leadership, certainly if they wish to remain leaders.
This is also about Geneva’s own competitive relevance going forward, of course. For so long the proposition was all about history, tradition, stability and current market size. Those themes are not dead, but they will potentially mean less and less if the centre fails to keep pace with change. And, like it or not, that means engaging with technology.
Geneva positioning as a WealthTech hub
Positively, going beyond a one-off or annual event, where the question of ‘what next?’ is always there, it was announced during the event that Geneva is putting in place plans to position itself as a #WealthTech centre of excellence. Thankfully, it seems the powers-that-be recognise that wealth management is changing, that technology is core, and that their role must adapt.
We were pleased to hear about the event. We were even happier to then hear that the event was not the end but in fact the start. However, while Geneva clearly has a deep history in wealth management, is a leading international wealth management centre by AUM, has a large marketplace / ecosystem of wealth managers and solution providers to the sector, positioning itself as a worldwide centre of WealthTech excellence is by no means an easy win.
What it involves
For the Genevan state, there will be three stages of support as they seek to turn the city into a WealthTech centre of excellence. There will be an incubator and an accelerator to identify and accompany start-ups; an ecosystem of institutions and customers to test their products and give feedback; and financial resources to support these initiatives.
Pushing for change
We see a range of challenges in the centre delivering on its plans. And we raise these issues after years of speaking with wealth managers and all too often hearing the same dismissive responses. Among the challenges, we see the as clear examples of issues that will have to be overcome:
- The traditional wealth management drug: Factors like tradition, stability, relationship focused, secrecy, high fees, inside-out (wealth management business led) over outside-in (client centric), HNW and UHNW oriented, referral-led, and so on, dominate. These themes are deeply embedded in the market and will be a hard drug to come off. But they do not always sit well alongside much of what WealthTech represents.
- Industry mindset / willingness to change: Clearly related, there is a deeply embedded mindset that we see as largely outdated and unwilling to truly recognize change never mind react to it. This is an industry that has done very well from the traditional model, many of the industry leaders are of an age and wealth where change is simply not relevant to them, and where resistance to change (which equates to cost and risk) is high.
- Engagement and competition: While Switzerland remains a pre-eminent wealth management centre, has an established technology marketplace and a growing start-up scene, it has not done much historically to join the dots of wealth and technology. Others have done much more, such as London and Singapore. For Geneva to catch-up and lure relevant talent will not be that easy
- Financial commitment and ecosystem mobilisation: Finally, this plan will not achieve its goals without a significant ongoing financial commitment from various actors including the state, wealth managers, investors and so on. Alongside that investment, the wider ecosystem (such as education, legal, consulting, etc.) will need to be mobilised, both locally, nationally and internationally. That means hard miles.
Still, we see something important here and support the direction of this initiative. Geneva is a world-renowned, market-leading wealth management centre. That the centre, backed by its government, realises the need to focus on the role and potential of technology, and specifically an aspect of technology that best fits its profile, WealthTech, is standout. A more genarlist FinTech approach would be too broad.
Marrying technology with its natural strength in wealth management will potentially separate Geneva out from other centres and contribute to its success. But it will still require a significant mindset shift from many local players. And, for us, that remains the big question mark.
