“Over the last decade, we’ve evolved our technology into an ecosystem to easily adapt and enhance our digital proposition to meet clients’ ongoing private banking needs. We’re also open to leveraging the right partnerships to complement our in-house development,” says Anil Venuturupalli, COO, HSBC Private Banking

Over the past decade, there has been a significant increase in the rate of technological change and development. Within private banking, there is currently a greater emphasis on differentiation through digital services, as individual banks seek to attract and retain clients. This means that investment has shifted from middle and back-office systems, to front-end and client-facing systems.

Covid-19 accelerated this trend and served to take the provision of digital services from a ‘good-to-have’, to a ‘must-have’. “Remote working really exposed the critical client-facing digital gaps and friction, and this has turned into a renewed drive towards digitalisation. Clients now demand top-notch digital services as a fundamental expectation, so we have now accelerated technology investment as a means to an enhanced operating model. Clients are no longer content with investment advice. They actively look for a digital platform that complements this advice,” says Anil Venuturupalli, COO, HSBC Private Banking.

Venuturupalli cites three elements as having driven the move to digital. The first is creating a personalised service, which includes the concept of a ‘bank in a pocket’, enabling customers to access HSBC Wealth and Private Banking services through their mobile device. The second is creating the service layer under the front-end to join together disparate systems and data flows. The third is data strategy and analytics. This supports enabling technology that bridges data previously held within legacy systems to the digital front-end, and allows the bank to create added-value through actionable insights.

But the common thread to all of this, he says, is the cloud, a platform that allows for both scale and pace and one that Anil says banks are rapidly adopting.

Regional approach
Venuturupalli says, “Over the next five years, HSBC Private Banking will continue to develop our digital strengths in our existing markets, with an increased focus on Asian wealth. Understanding regional and local norms and client expectations will naturally be key to this digital transformation.”

In Asia, the need to have a robust digital proposition is more pressing than elsewhere, he says. “We recognise that the Asian marketplace is dominated by mature digital platforms, so the demand for digital products is naturally high in this region,” Venuturupalli says. “There is significant appetite from clients in Asia to test and learn,” he adds.

This translates into an increased expectation to be able to self-serve, not just from the emerging and mass affluent, but also from private banking clients. “Clients want to know where their portfolios are, have real-time valuations, message and video chat, receive proposals and transact while on the move – anything less is seen as substandard,” says Venuturupalli.

Ecosystems as a means to digital change
The key to delivering superior in-market digitalisation is understanding local market needs and any variations required in functionality. This is where third-party solutions can provide readily available insight and perhaps acceleration. “Where we feel the technology is a good fit for our clients’ needs, we will work with third parties. A good example is our Structured Product trading proposition, which is one area where we brought in a FinTech to assist us,” he says.

And this, he says, is the future. “Banking as a stand-alone 100% build-shop is no longer viable, which means collaboration with FinTechs can often be a strategically desirable, or at times necessary, option. We are already in transition to a technology ecosystem-based platform model.”

However, Venuturupalli points out that for banks, the volume of FinTechs in the market is overwhelming. “There is no clear way to differentiate between vendors and it is hard to get line of sight to the overall market and where specific players fit in. Therefore, the question of who to use, and why, is largely based on referrals and what we can learn from others in the industry,” he says.

Things that would make a FinTech stand out, he says, are not just the technology they offer, but whether they can collaborate effectively with the bank, to pin-point the meaningful issues and find a resolution to specific pain points. “In addition to a truly interesting technology proposition, a healthy knowledge of Agile transformation and banking funding processes is a must for any aspiring FinTech.”

The future is one of continued technology evolution at pace. The successful vendors will be the ones that can work with banks to find solutions that align to their existing technology infrastructure.

Venuturupalli concludes: “A systemic shift to open banking and transparency will drive an evolutionary shift in banking technology. It is down to both banks and the FinTechs to make sure that technological innovation and evolution co-exist with the right governance and oversight to deliver on client expectations.”

This interview was part of TWM's recent APAC Wealth Technology Landscape Report (2021). Click here to access the full report.