Asian Private Banks' Digital Odyssey

Cognizant SPr Asian Private Banks' Digital Odyssey How to Embrace Digital Transformation As investors in Asia increasingly use digital technologies to address their wealth management needs, private banks must apply digital technologies to more effectively deliver meaningful, high-value adding interactions and tailored advice. Asia's wealthy digital technologies are active users of How Wealthy Asians Spend Their Time Online 6. 5.3 4.1 3.7 3.3 2.3 2.1 Banking & Investments News Social General Online Gaming Media Research Purchasing Source: Scorpio Partnership and Sungard Time spent by private investors on various methods of communication weekly, Worldwide 6. 4 3. The Americas Europe Asia-Pacific Source: Scorpio Partnership 69% 92% of 59% 61% 53% 47% 66% 60% 60% 65% 56% 36% 47% 58% 49% 3,025 57% 50% wealthy Percent of respondents Less than investors? 40 to 49 ent of respondent worldwide 40 surveyed, use online tools to years old years old support their wealth 49% 47% 36% 35% management decisions. 33% 43% 53% 24% 41% 10% 27% 34% Market review 22% 37% I Portfolio evaluation I Tax efficiency I Information about securities I Risks and restrictions I Allocation analysis I Performance analysis 41% 39% Percent of respondents cent of respondents to 59 years of age and older Breakdown of assets years old Multiple response permitted In the next 5 years, private investors expect to increase their usage of digital communications. Current weekly usage in hours Percentage planning to use "much more" in 5 years' time 4.9 33% 41% 56% E-mail Meeting face-to-face 4.5 20% 24% 36% Telephone calls 3.9 19% 19% 40% Secure Web portal 3.5 30% 31% 46% Social networking 3.2 22% 23% 47% SMS 3.0 19% 25% 40% Written 3.0 16% 17% 28% communications Asia-Pacific Instant messaging 2.6 19% 19% 44% The Americas VOIP calls Europe 1.9 28% 19% 33% Source: Scorpio Partnership To Successfully Address Digital Demands, Banks Need to Reduce Operational and Customer Costs Profit Margins of Asian Private Banks Under Pressure Net Revenues 120 Increase O Decrease Present levels 2009 levels 100 Stable 2010 levels 2008 levels 80 78 77 75 68 83 83 84 90 107 106 103 106 78 84 88 99 Operating Profit 120 100 U.S. Western *CEE Asia 80 Europe (excluding India) 60 40 Operating Costs 20 26 25 21 26 120 24 24 20 26 53 56 53 56 11 14 15 20 100 U.S. Western *CEE Asia 80 Europe (excluding India) 60 *CEE = Central and Eastern Europe Source: Mckinsey Private Banking Survey 53 52 51 42 59 64 64 61 54 50 50 50 67 70 73 79 U.S. Western Europe *CEE Asia (excluding India) ... and keep pace with client needs Private Banks Need to Embrace Digital to Stay Competitive 1 Of the 21 top private banks operating in Asia that we studied, 75% do not offer a full-fledged mobile wealth management app ... II .. to their clients. Lean start-ups such as Dragon Wealth and Wealthfront 1 Of leading global private banks, heavily leverage technology to offer automated investment only 22 had a smartphone optimized Web site while 14 banks did not have a mobile app.5 advisory at low costs. Catching Up But they are Proportion of institutions that currently .. enable clients to transact business offer clients digital channels for access to portfolio information, versus in three years' time. ... or issue instructions through digital channels, versus in three years' time. 100 100% - 90 80% - 72 77 60% - 49 40% - 29 33 23 20%- 10 0% - 2013 2016 2013 2016 2013 2016 2013 2016 2013 2016 2013 2016 I Application through a dedicated Web site I Through dedicated smartphone/tablet/PC application I Through social media: Twitter, Facebook, etc. Source: Wealth Briefing Note: The sample includes an undisclosed number of chief technology officers from firms that cover major wealth management markets and together have over $1 trillion of assets under management. Challenges on the Path to Transformation IA dearth of skilled analysts makes it tough for banks to derive meaningful insights from client data.? Information silos and fragmented systems architectures thwart a holistic view of clients' investment portfolios and their relationship with the bank. Pervasive legacy back-end core systems make it difficult to interact with real-time mobile and online services. IAdvisors lack access to productivity-enhancing digital technologies. First Steps of the Digital Odyssey 1. Create a Holistic Digital Banking Strategy I Develop both a long-term digital blueprint and a tactical plan; deliver immediate wins and address client and internal demands. I Balance "technology and touch." I Shift mindset and focus from selling products to selling clients. I Use customer journey maps® to trace customers' steps and understand their behavior as they travel through the organization's processes. 2. Manage Change to Ease Digital Transformation I Top management should appoint digital banking champions to address employee concerns. I Upskill teams to take advantage of digital technologies their jobs. 3. Derive Value by Deploying Digital I Offer personalized products and services: Use digital technologies to add value to advice and products by tailoring them to clients' specific needs. 01 I Serve clients quickly anytime, anywhere: Mobile tools improve advisor efficiency and effectiveness. Mobile Tools Boost Advisor Effectiveness and Efficiency 80% 70% 60% 50% 40% 30% 20% 10% 0% Improves my advice quality Improves my service quality Improves my sales process Saves me time None of the above Ineffective Effective Source: CEB Wealth Management Advisor Benchmark, 2012. Respondent base = 1,422 Note: Multiple responses permitted. Our Advice 1 Target clients accurately: Client data + social media data – Provides a more accurate and broader client picture for targeted marketing campaigns. Leverage digital to enhance customer experience: Digital technologies can deliver unique and customized experiences to clients at every touch-point. 1 Use automation and digital to improve efficiencies: Self-service tools and low-cost digital channels can reduce costly face-to-face client-advisor interaction and costs of operations and providing advice. I Improve revenue and reduce risk: 47% of revenue from new sales is originated by advisors with the ability to view client data across silos. 10 To learn more, please read "Asian Private Banks: How to Embrace Digital Transformation," http://cogniz.at/DigitalBankingAsia. Footnotes 1 "Stepping Into the Communication Age," Scorpio Partnership, January 2013. http://www.scorpiopartnership.com/uploads/pdfs/2013%20jan_ScorpioPartnership_Futurewealth2012.pdf 2 The clients have an average worth of USD 2.9 million. 3 "Digital Engagement Crucial For Advisers," Financialobserver.com, April 2014. http://www.financialobserver.com.au/articles/digital-engagement-crucial-for-advisers 4 "Stepping Into the Communication Age," Scorpio Partnership, January 2013. http://www.scorpiopartnership.com/uploads/pdfs/2013%20jan_ScorpioPartnership_Futurewealth2012.pdf 5 "Social Media Survey Private Banks 2012," Assetinum, 2012. http://www.assetinum.com/en/social-media-private-banking-2012.html 6 "Technology and Operations Trends In The Wealth Management Industry," Wealth Briefing and Advent Software, 2013, http://www.investmenteurope.net/digital_assets/6812/Tech&OpsReport_-_FINAL_FOR_DISTRIBUTION.pdf 7 "How Client Data Can Transform Sales," Corporate Executive Board, May 2013. http://www.executiveboard.com/blogs/how-client-data-can-transform-sales/ 8 "For Effective Digital Banking Channels, put customers First," Cognizant, http://www.slideshare.net/cognizant/for-effective-digital-banking-channels-put-customers-first-part-ii-of-i 9 "Global wealth management technology spending to reach $32bn by the end of 2017," Ovum Knowledge Center, December 2013. https://www.ovumkc.com/Products/IT/Retail-Banking-Technology/Global-wealth-management-technology-spendin g-to-reach-32bn-by-the-end-of-2017/OVUM-VIEW 10 "How Client Data Can Transform Sales," Corporate Executive Board, May 2013. http://www.executiveboard.com/blogs/how-client-data-can-transform-sales/. KEEP CHALLENGINGM © Copyright 2014, Cognizant. All rights reserved. No part of this document may be reproduced, stored in a retrieval system, transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the express written permission from Cognizant. The information contained herein is subject to change without notice. All other trademarks mentioned herein are the property of their respective owners. Percent of Institutions Number of Hours per Week E-mail ) Meeting face-to-face Telephone calls Secure Web portal O) Social networking SMS/text messaging Written communications Instant messaging VOIP calls