Mon, Jun 01, 2015 - Page 14 News List

Bankers turn to technology to reinvent image, strategy

Reuters, ZURICH, Switzerland

No longer is schmoozing over long lunches and fine wines enough; Swiss private bankers are turning to video games and virtual reality to attract a new generation of skeptical clients and see off digital rivals.

Technology is likely to appeal to multitasking millionaires with little time to spare. However, wealth managers must also win the trust of younger investors who have experienced two downturns during their formative years, plus a furor over Swiss banks’ involvement in tax evasion.

In a fifth-floor office just off Zurich’s main shopping street, researchers at UBS Group AG are testing dozens of technologies to see what could make the world’s biggest wealth manager more appealing as fortunes pass to the next generation.

“How do you get under the skin of clients today? They often work on their mobiles and they manage their wealth in their spare time,” UBS innovation lab head Dave Bruno. “It might be in the bathroom, it might be waiting for a flight.”

Bruno and his team are designing video games, including a prototype puzzle for iPads and smartphones, and looking at virtual-reality simulations to help people visualize what are often complex investment portfolios.

They are also working on technologies that allow clients to log into their accounts using their voice patterns and facial features, doing away with the time consuming and frustrating need to answer security questions.

UBS has opened a second research lab in London and plans another for Singapore later this year. It is also exchanging ideas with financial technology startups, as well as Google Inc and Amazon.com Inc.

UBS chief operating officer for wealth management Dirk Klee said clients need investment advice and performance.

“It’s not just being a ‘concierge service,’” he said.

Many millionaire and billionaire customers, whose ages average more than 65, still welcome the concierge service — such as sorting out the paperwork on their new Ferrari.

However, in the next few years private banks must deal increasingly with clients who are perhaps 30 years younger, as what is often family wealth passes down to the next generation. These people grew up with the tech bubble bursting around the turn of the century, followed by the 2008 financial crisis.

This is shaking things up at Switzerland’s private banks, which are already reeling from a US-led campaign against tax cheats. This has effectively ended the industry’s secrecy rules and encouraged publicity-shy customers to withdraw hundreds of billions of francs from Swiss accounts.

Meetings are increasingly held over video links instead of in banks’ wood-paneled rooms overlooking Lake Geneva, while clients look to social networks for investment advice and to compare portfolio performance.

Some of the technology being investigated is less familiar than simple video conferences. It includes Facebook-owned Oculus Rift virtual-reality goggles, which can present clients’ portfolios as a city.

“Which pieces of your city are missing? You don’t have a water system in place, which might be your investments into a certain area in the alternates market,” Bruno said.

“Your skyscrapers are too tall, you’re invested too high here. There are ways to use the new technology to do things in finance that are quite cool and interesting for our business model,” he said.

Cool technology notwithstanding, banks still need to get the basics right, according to Felix Wenger, a director at the Zurich office of the McKinsey & Co consulting firm.

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