Reflections on discussions at private banking and wealth management Switzerland
Our FNZ team recently had the privilege of attending the private banking and wealth management Switzerland Conference and Awards. Hanspeter Wolf, FNZ Chief Technology Officer and Appway founder and former CEO, spoke about how private banks can thrive in the digital era. The conference was an exceptional event to engage with industry leaders on digital innovation where a key topic of interest in our discussions was Hanspeter’s contention that a best-of-breed approach is no longer viable throughout private banking and wealth management.
Why? Looking back at the evolution of the industry and tech solutions over the last two decades, it is clear the landscape is becoming increasingly complicated, and tech alone will not solve that complexity. At the turn of the century, the focus was on core tech solutions for back-office booking and admin. After the 2008–9 financial crisis, a raft of compliance regulations resulted in increasing fines and operational costs that in turn resulted in a myriad of mid-office compliance tech point solutions. Today, the market is flooded with solutions. For example, according to Deloitte, there are more than 400 RegTech providers currently in use (RegTech Business Cases report, 2021).
The result? Added complexity and expense. Banks and wealth managers are now often managing a mosaic of third-party tech providers and solutions and struggling to connect different tools and workflows into an efficient, unified practice. As highlighted in our white paper on risk-driven compliance case management, firms today often rely on “multiple lines of defence” to ensure compliance; however, arming those multiple lines of defence often means that each stakeholder within the business — from customer relationship manager to compliance officer — has access to a range of different tech data sources and intelligence solutions for assessing risks, and each of these must be managed and operated.
In recent years, many of our customers have implemented digital onboarding and account opening solutions to improve the investment journey for clients while also having to adapt to a changing regulatory environment. We have collaborated with them to integrate digital know-your-customer, anti-money laundering, and tax domicile questionnaires, and to connect service providers and RegTech to facilitate compliance. At the same time, they have had to staff up compliance functions, create new processes, and build teams to carry out regulatory client reviews. This compliance staffing and process management are expensive and complex to maintain, especially when demand for such staff fluctuates as a result of sudden regulatory or business changes, such as international sanctions or the acquisition of a large set of clients due to M&A activity.
New digital full-service models at scale are becoming imperative to resolve this complexity. This is why FNZ provides a complete, end-to-end vertically integrated wealth platform that includes investment servicing. The FNZ platform connects and serves the entire wealth spectrum, dealing with the needs and complexities of individual investors and families at different life stages, whether setting up long-term investments and pensions or actively managing high-net-worth portfolios and complex trusts. This fully integrated service model strips administrative costs out of the client servicing process, allowing firms to focus on building client relationships and growing their client base.
The model also enables a seamless digital experience for clients and client-facing teams because it allows for business composability. Composability overcomes complexity using modular tech “building blocks” that are flexibly assembled according to a financial institution’s specific context and requirements. By using this composability combined with investment servicing, digital onboarding and account opening solutions can be extended to cover the end-to-end compliance vertical and deliver compliance as a service direct to compliance officers and risk committees. The aim is to make the entire growth journey frictionless for both the firm and its clients while maintaining the firm’s agility and resilience to adapt to a rapidly evolving market and changing investor needs.
This complete, end-to-end service model — from digital client onboarding to back-office investment processing — also overcomes administrative and operational burdens. Regulatory compliance reviews, for example, have become increasingly complex for firms to manage, and a full-service model includes both the technology and the human resources to deal with the admin operations. In this way, the FNZ model supports a firm’s first line of defence by handling the majority of compliance reviews that need to be processed straight-through while providing the insight to allow a firm’s compliance functions to focus on the cases that need attention.
Whereas best-of-breed often brings a significant operational burden, FNZ’s vertically integrated, end-to-end service model can be an economic game changer. In an industry that is rapidly evolving and where both personalized and digital services are essential to meet investor expectations, it is time to alleviate complexity and double-down on client experience. At FNZ, we view this as integral to our company mission to open up wealth for both our customers and end investors.