Up until now, he had been successful. He was in the right place to succeed, like generations of wealth managers before him. This is because Switzerland still has an excellent reputation as a leading financial centre. Over the decades, it provided him the opportunity to build his career. Yet, despite his decades of experience and loyal client service, the rulebook had clearly changed.
He had entered the fast-paced digital age
Of course, this is a modern-day dilemma that all wealth managers face. Yet, nowhere is this more apparent than in Switzerland, where the country’s wealth management industry is having to re-think how it operates.
The collapse of constitutionally enshrined banking secrecy was an important wake-up call. After decades of growth, Swiss wealth managers had to suddenly re-examine and rethink their value proposition to clients.
The upshot has been that they experienced significant outflows thanks to their jurisdiction losing some of its lustre. It also forced them to focus more on competing with their international competition in other financial centres.
They had to challenge the status quo internally and forget the conventional wisdom accumulated on wealth management in Switzerland. This meant getting out of their comfort zones and rethinking how to serve their clients in the future.
This period of reflection should, in theory, have left them well prepared for the oncoming digital age, where many new threats lurk. First, there is the rising popularity of newly set-up family offices who have been empowered by innovative technology that has given them largescale bank-like infrastructure. This development has already started to eat into the market share that traditional wealth management once had.
Then there are those tech-savvy FinTechs and data-rich mega-techs like Google and Amazon who are now also threatening to alter the global wealth management landscape. This is quite surprising because this is a threat that simply didn’t exist a decade ago.
Nevertheless, the onset of the digital age also offers incredible opportunities for Switzerland’s wealth managers. Against a background of global economic uncertainty, people are saving and investing more for the future than ever before.
To succeed, all they need to do is overcome some hurdles. The biggest challenge will be lowering costs, both for themselves and the clients they serve.
This will be particularly hard to achieve. Switzerland has one of the highest overhead costs for doing business in the world, owing to high wages and the high costs of funding a company’s day-to-day operations.
That’s why many Swiss wealth managers see the quality of the services they offer as a critical differentiator. Somehow, they need to deliver that same level of Swiss quality, but at a reasonable price to entice and retain clients, while fiercely protecting their margins.
Achieving this is no mean feat. They’ll need to be technologically armed on a scale that they have never experienced before. And this is quite a tall order for an industry that has traditionally underinvested in technology.
Switzerland does, however, have a strong culture of entrepreneurship and it has exported this successfully to the world. Outside of finance, the country is famous for Swiss watches, fine chocolate and leading-edge pharmaceuticals.
It’s this same entrepreneurship that can help drive the change needed, by using technology well, to improve the services they offer clients. An easy win, for example, is to use technology to improve the way they communicate and report to clients.
In the digital age, clients are already requesting more frequent reports and more transparency on how their wealth is invested. Up until now, Swiss wealth managers have delivered this type of service very effectively through superb precision and efficiency.
However, the increasing demands of digitalization have threated to overwhelm them. In many instances, the complex workflows that have served the Swiss wealth management industry so well could simply be automated.
Automation can help to reduce the operational friction created by manual intervention during reporting cycles. For example, automation can notify the right people when actions need to be taken. This could be to sign off documents, submit data or write commentary. The benefit of doing this, is that it prevents human errors creeping in.
Additionally, it can deliver increased levels of oversight and governance around the reporting process. Dashboards can also help monitor the client report production workflow process and automatically escalate issues and highlight problems early on. If a deadline is missed, chaser emails could be sent automatically, without the need of a person to monitor and action this themselves.
Cumulatively, manual steps that could be automated can equate to days’ worth of man hours saved every month. And over the course of a year, hundreds of thousands of Swiss francs could be saved just through automation.
Using technology to simplify and automate the workflow would also reduce the risk of human error or breakdowns in the reporting process. It allows reporting teams to manage by exception. If data is missing, or incorrect, the appropriate teams can be notified to investigate and correct which can help reduce time to market during each reporting period.
In many cases, up to 90% of manual processes used during client reporting process could be eliminated, creating considerable cost savings for wealth managers. It also allows teams to focus on servicing clients, rather than performing manual, time consuming processes. Although not the sexy side of digitalization, automating and simplifying the workflow in client reporting process could offer Swiss wealth managers a valuable competitive edge through cost savings.
This is how Swiss wealth managers could increase their productivity in the digital age.
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This article originally appeared in The Wealth Mosaic's 2020 Swiss Wealth Technology Landscape Report. Click here to access and download this report: