How do new technologies help or challenge your daily work? 

 – “In the next years, private banking will see an offshoot of digital retail banking, based on the extension of functionalities used in loans and deposits, banking services such as payments or cards, inheritance, and for digital private banking, investment advice must be added as an additional functionality.

The greatest asset of a traditional wealth manager is his relationship with his client. But new, younger clients will no longer be satisfied with voluminous printed reports and face-to-face meetings. These wealthy young people will increasingly expect solutions based on digital technology, which most private banks are not yet able to provide, including access to real-time information and automated transaction capability. To achieve this, private banks risk accelerating the departure of their new young customer base towards the digital neo-private banks that will emerge from the digital retail banks, it’s just a matter of time.

Private banks often fear that digitisation will lead to the disintermediation of the customer’s relationship manager by an APP or, worse, a robot-advisor. It’s very clear that private banking customers can afford the latest technologies and use them to their advantage, and for them the ideal private bank is one where the customer is always online, where they can see the value of their portfolios in real time, 24/7, where information is requested and provided instantaneously and where interaction with their wealth adviser is supported by a digital solution.

Initiatives like open banking, the API economy and collaboration with fintech could help to create this new ecosystem of the digital private bank of the future.

Do the new wealthy clients have different expectations from previous generations? How is the management of these profiles impacted? 

“Younger wealthy clients see fewer opportunities in traditional investments, but more growth in alternative assets such as private equity (including business angel or venture capital), private debt, specialist funds, and... crypto assets. The age of the young person is the dominant factor when it comes to interest in crypto currencies.

Wealth managers and private bankers will need to start offering their clients a wider range of investment opportunities to remain viable. Over the next few years, private banks will increasingly offer their clients access to new asset classes. Because of the volatility of these asset classes and the fact that they are much less regulated than traditional asset classes, it will be difficult for private bankers to provide advice in the same way as they do for listed assets nowadays. But this could change with the upcoming future Central Bank CBDC (DigitalEURO), already existing regulated stablecoins like VNX-EUR or VNX-CHF or even precious metal tokens like VNX-Gold, or pure crypto-currencies like Bitcoin?

Nowadays the scenario is that private banks will connect customers to investment opportunities without providing their own investment advice, which is one of the major added values until now. The acceptance of crypto-currency transactions will be the most striking manifestation of this change. A good example is the evolution within JPMorgan, which offers a bitcoin fund for wealthy clients, but chairman and CEO Jamie Dimon still isn’t personally in favour of the cryptocurrency as he said in 2021. “I’m not a Bitcoin supporter,” Dimon said. “I don’t care about Bitcoin. I have no interest in it. On the other hand, clients are interested, and I don’t tell clients what to do, Blockchain is real.”

“We use it,” according to Dimon. “But people have to remember that a currency is supported by the taxing authority of a country, the rule of law, a Central bank.” That was not the first time Dimon has been bearish on Bitcoin. Already in September 2017, Dimon called Bitcoin “a fraud” at a conference presented by CNBC and Institutional Investor. “It’s just not a real thing, eventually it will be closed. It won’t end well.” But a few months later in January 2018, Dimon had the “regret” about making the comment. “I’m not interested that much in the subject at all.”

What are the main challenges that asset managers face today? 

“To meet the heightened expectations of this new category of young customers, private banks will need to offer an increasingly wide range of products and services to retain this clientele. In addition, the simplicity of digital banking, particularly for wealthy young customers, means that they can very easily change banks if their parents’ bank does not offer what they want.

New providers are offering access to new asset classes, help with ESG and philanthropic projects, tailored professional advice and even lifestyle services. Private banks have a choice: or they can either accept that their clients engage with these providers without getting involved, or they can decide that they need to play a role. What if private banks became the trusted gateway through which their customers could access a much wider range of services than the previous generation? Private banking could become a platform where the customer benefits not only from the services offered by the bank itself, but also from transparent access to services and products provided by carefully selected third parties, the famous API economy or open banking. Extending private banking services to other wealth management services has always been part of the wealth manager’s remit.

Today’s technology makes this a reality, and with much less efforts than before. Open-banking APIs, Web3.0 investment platforms, angel investor networks, cryptocurrency exchanges can transform private banking into the single point of contact, these new clients need to make the most of their wealth. In the long term, private banking will become a digital platform from which customers can access the outside world, and this is going to be a more sustainable and profitable strategy than bricks and mortar buildings.”