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Will relationship managers continue to prosper in the post-pandemic world of digitalized private banking or will margin compression and new business models render many irrelevant? finews.asia takes a look at 5 ways for private bankers to stay relevant in the new environment.

Digitalization in private banking is increasingly being viewed as not only a way to keep up with the times but, in certain facets, a material enhancer of business and potential profits.

Take the investment-related communications (the first stage to a multi-stage cycle that includes transacting) as an example. Traditional dissemination of such content often required costly events, research documents with low readership and intensive follow-up by relationship managers (RMs) with passive clients. But under the digital model, clients have proven to be much more receptive and often proactively willing to engage.

In Asia, Standard Chartered Private Bank saw 450 clients attend online webinars in two months while Credit Suisse registered a whopping cumulative digital attendance of 29,500 between February and July. At UBS’s wealth arm, over half of all equity trades between December 2019 and June 2020 were executed via its e-banking platform.

Different Role, Different Pay?

Although many note that the digitalization efforts do not harbor intentions to make RMs obsolete, there is an undeniable will to shift banker behavior to focus less on activities with low margins that are more capable of automation. This has the potential to disrupt compensation models and, effectively, payouts.

Clients’ core assets (listed stocks, liquid bonds) are one of the most obvious areas where RMs are already losing grip to their private banks. In addition to multi-year efforts to convert assets into discretionary mandates, many private banks have been actively developing advisory mandates with attractive pricing models and user-friendly digital platforms. It is unlikely that RMs can justify most trades being executed by a client online and ones being made manually through the bank as equal, no matter how much pre-trade legwork can be claimed.

As clients increasingly seek to directly engage and directly transact with banks, RMs could see their role marginalized and pay disrupted. So, how can they remain relevant and survive in the post-digital world of private banking?

1. KYC More!

As technology improves along with private banks’ grasp of its potential, RMs increasingly find many overlaps in activities be it general engagement, communication of investment ideas or trade execution. The growing pool of user data being collected will only further enhance banks’ ability to understand client needs and connect with them directly.

This is where relationships matter. Private bankers need not be relegated to a pure execution role or be only seriously involved in the post-trade process should they be less focused on areas that are more easily understandable by machines such as a client’s favorite stock or sector for trading.

Is there an impact investing opportunity that is somewhat aligned to your client's philosophical values? Is your client just trading inherited family assets to prove their know-how in financial management? Is there a potential new spouse that could complicate how assets are structured for family wealth planning?