In the fast-paced environment of innovation and rapid change, balancing innovation and sustainability has become a major issue. This scenario poses challenges that must be overcome and offer opportunities that must be seized.

To discuss this, Objectway participated in the Salone del Risparmio 2023. During the panel discussion moderated by Michele Tanzi, Market Solution Director, outstanding industry professionals such as Marcello Colla, Strategic Planning of Etica Sgr, Stefano Rossi, Chief Executive Officer of Euclidea, Gianmarco Zanetti, Managing Director Euromobiliare Advisory SIM and Gianni Piazzoli, Chief Investment Officer of Vontobel, discussed the changing economic and regulatory environment.

Balancing regulatory compliance with evolving client relationships 
The financial industry is facing a paradigm shift from a product- and institution-centric model to a customer-centric model. When it comes to customer experience, the market agrees on the need to hyper-personalise the offering to support customers’ needs and demands. Michele Tanzi asked Gianmarco Zanettini, Managing Director of Euromobiliare Advisory SIM, about this.

"In general, the regulatory wave or regulations can be seen as a potential competitive advantage," says Zanetti.

An example of this is MiFID 2, which – probably perceived as a pitfall at first by financial intermediaries – in reality, from a client-centric perspective, has brought significant advantages in terms of greater transparency, cost representation, and saver protection. Moreover, it has led to a change and diversification of service models, thus increasing competitiveness and competition to the benefit of the customer. In fact, the presence of more than one service model makes it possible to create more value for the customer.

On the other hand, regulation pushes intermediaries to communicate more effectively and make value better understood by customers. Therefore, it becomes crucial to address the issue of communication not only from a marketing perspective but also in terms of value for the customer.

"Technology, digitalisation, hybrid forms, and platforms have made it possible to make a qualitative leap from simple financial advice to wealth advice, enhancing the value of all elements of assets and simplifying the pricing of the service. These elements are fundamental to returning value to clients," says Zanetti.

The main element if we talk about sustainability is, therefore, according to Zanetti, to what extent the intermediary succeeds in making the client perceive the tangible value of this sustainability, starting from the assumption that the client wants to know how much profit he can get with respect to the risk he is taking, and how much from his investment he can actually get.

"This, in my opinion, is something we need to reflect on. It is only through deep expertise in these areas and, above all, by permeating the entire corporate organisation that we can guarantee an experience that provides real value to the end customer," Zanetti concluded.

ESG and the evolution of the offering: the customer perspective and industry forecasts
Keeping the spotlight on client value, particularly with respect to ESG criteria, Tanzi questioned Marcello Colla, Strategic Planning at Etica Sgr.

"We have always had a 360° approach to the ESG sustainability of our products, but lately, we have felt the urgency to focus on specific products to address crucial issues", began Colla.

He cited climate change as the first focus, with reference to Impatto Clima, which was well received by the client. The second theme that Etica has directed its offering towards is social and has become more relevant in particular following the two major challenges, war and pandemic, that the world has faced recently.

"It is not possible to conceive of an ecological transition that excludes large sections of the population, or that is based on structurally complex elements. This is an issue we have already addressed in the past as Etica SGR when we wanted to invest in renewable energy but found ourselves unable to do so because of the questionable working conditions in which solar panels were produced," says Marcello Colla.

Regarding customer acceptance, the topic is more complex to convey than the climate theme. The social theme is more multifaceted and has different nuances in different contexts – the very concept of ‘social’ can take on different meanings if we consider companies operating in less industrialised countries than those with operations in Italy. Therefore, it is necessary to adopt a broader reasoning.

"We believe and have always tried to bring value not only in financial terms, but in terms of perceived impact. Creating impact is a value that we try to offer our clients. We recognise that we are at an early stage, however, we believe that it is a fundamental path if we want to give equal dignity to social and environmental impact compared to the traditional economic dimension," says Marcello Colla.

"So going back to the acronym, where the E is now obvious to everyone and the G has been known in the business world for years, the S is definitely an extremely crucial aspect today," agreed Gianni Piazzoli, Chief Investment Officer at Vontobel.

An unbalanced situation leads in the long term to imbalances in the various sectors of society – the healthcare sector, the pension system, etc.

"If we want to reduce the risks for society, the S must be equivalent to the E," he said.

Looking at the medium to long term, according to Piazzoli, over time, there will be an increasing push towards the adoption of ESG impacts in financial valuation, including the evaluation of certain quantitative summaries alongside traditional company valuation approaches.

"Looking at the short term, however, an inevitable economic slowdown is expected, with rising interest rates having a significant impact, especially in the real estate sector. This phenomenon has been observed in some countries where real estate prices have risen particularly high. In Italy, the effect has perhaps been less noticeable on the one hand. However, it is important to consider that if a significant economic slowdown or recession occurs, it may be more gradual than drastic in nature. It should be noted that this is one of the most predicted and anticipated recessions in recent decades; therefore, the system as a whole is already preparing for this imminent scenario," says Piazzoli

Optimising and reconfiguring business processes through strategic outsourcing
"Our data show that market players are looking for outsourcing opportunities to improve and outsource part of their processes. This search and the consequent selection of their trusted partner is now taking place from a more strategic, and less tactical, perspective," said Michele Tanzi, referring to the collaboration between tra Euclidea and Objectway.

"Added value for the customer can take different forms, depending on individual perceptions. However, the inefficiency of a process does not depend on perceptions. It is, therefore, crucial that all elements of the process work synergistically. The partnership with Objectway allows us to improve the efficiency perceived by the end customer, which we will continue to invest in," Stefano Rossi, Chief Executive Officer of Euclidea.

In conclusion and considering sustainable innovation in an overall context, the roundtable participants agreed on the need for and importance of investment strategies that are sustainable and adaptable in the medium to long term. To achieve this, it is essential to have an agile organisation and a corporate culture that is focused on innovation; it is imperative to put the customer at the centre of experimentation and to innovate based on their needs. In this scenario, the ability to build partnerships and collaborations can facilitate the exchange of ideas and the reduction of costs, creating an innovation ecosystem.

Read the original article here.