“Asia’s banks have a large and growing retail customer base. A huge asset, and one which is becoming more important as middle class wealth rises” Taiyabi began. “More and more people in this customer segment are digitally active, they want personalised solutions available anytime and anywhere. A major concern for banks and wealth advisory firms is how they can satisfy their customers’ evolving wealth management expectations.”
Beware the new entrants
Taiyabi explained that these same banks face increasing competition. This could come from either new B2C start-ups, from financial institutions with innovative new offerings or new entrants such as Big Tech. “If you do not act decisively,” he told delegates, “you risk customers drifting away to the growing number of competitors with interesting new digital offerings.”
He added that in 2016 global accounting and consultancy firm PwC estimated that some 20% of financial service businesses would be at risk by mid-2020 if they fail to act. “And you can see that it is already happening,” Taiyabi warned.
Taiyabi supported this view with reference to a slide show that highlighted the disruption that had taken place since the advent of the smartphone in 2007 and 4G mobile connectivity in 2012.
“We can see that companies such as WealthFront and Betterment started to offer wealth management through digital channels directly to consumers in the US,” he reported, “and then Charles Schwab and Vanguard joined them shortly thereafter, followed by others, causing further disruption to the banks’ traditional customer base.”
Addressing the threats
Taiyabi observed that to address the threat of losing customers, their most valuable asset, banks need to be delivering effortless wealth management.
” Very few people want to spend their leisure time managing their wealth. They would rather spend spare time with the family or enjoying time with friends. They expect their wealth management to be simple, managed by professionals and focussed on delivering good financial results. They want to be able to access some of the best advice and managers in the market.
DBS offers the model
In Asia, Taiyabi cited regional bank DBS as an excellent example of an institution that has taken this challenge head-on and launched digital solutions targeted directly at their Treasures customers with a roadmap to launch to retail customers. “Their solution is fully automated,” he noted, “and helps bring discretionary portfolio management services to a broader cross-section of their customers. ”
He added that a digital offering should also demonstrate a genuine commitment to the customers’ best interests. “That,” Taiyabi observed, “includes best-in-class investment management, low minimum-investment amounts, and easy top-ups or withdrawals. And, of course, packaged in an intuitive user-friendly journey.”
Scale is essential
Taiyabi then commented that this service must be offered at scale to bring value to an institution. “Any platform which requires any human intervention in the back office will not scale to tens of thousands of customers. Accordingly, you need a platform that is able to support low minimum subscription levels while dealing with a complex web of factors ranging from settlement and system requirements dictated by legacy infrastructure, to ensuring the customer experience is intuitive during every interaction such as rebalancing, top-ups and withdrawals.”
The Quantifeed ‘Q Engine’
He then delved into more detail on the solution DBS has applied to this type of challenge. “DBS is a great example of a bank that has done exactly this recently and very successfully. Quantifeed have helped them launch an easy-to-use product, a risk-based investment solution. It offers customers a range of model investment portfolios that are designed to match their risk tolerance and needs.”
He explained that the DBS digiPortfolio service is Asia’s first robo-adviser based on in-house discretionary management, combining human expertise with robo technology. “It is a platform that Quantifeed has powered and customised to help realise the unique investment journeys for DBS customers.”
With that, Taiyabi pointed to some of the critical customer benefits that are already being delivered through this new DBS platform.
A new world opens to the mass-affluent
“Customers have access to a set of diversified multi-asset portfolios matching their risk-return requirements,” he reported, “and they have access to leading specialist asset managers. Additionally, there is regular portfolio rebalancing. And with automation across all functions, it has been built to scale.”
Democratisation of the offering
He closed his talk by saying, “With a minimum investment amount of only SGD1,000, DBS’s digiPortfolio service, which is powered by Quantifeed, is now accessible by a considerably large segment of customers. ”
To conclude, Taiyabi re-stated the problem for financial institutions offering wealth management, “How to satisfy the evolving demands of the customers you have spent years and millions of dollars to acquire?” he pondered. “Innovating to meet these customers changing expectations is major risk for these banks. If they fail to act, they will see fintechs, Big Tech and other banks take away their business”. It all creates a unique opportunity to rise to the challenge by delivering effortless wealth management at scale.”