Bhaskar Laxminarayan: «Fintechs Don’t Bring Any Actual Knowledge»
Fintechs still lacks actually wealth management knowledge, Julius Baer's Bhaskar Laxminarayan told finews.asia, underlining that improved efficiency and user interfaces alone are not sufficient to displace incumbent private banks.
«Just because someone shows you a book with a better-decorated cover doesn’t mean the content is any better,» said Julius Baer’s Asia chief investment officer Bhaskar Laxminarayan in a recent conversation with finews.asia, describing some of the fresh and tech-enabled market entrants.
Although gains have been realized in more straightforward areas that can benefit from large-scale automation, such as payments or account opening, Laxminarayan believes that the business of wealth management is less susceptible to such pressures.
«As wealth managers, our core competency is to be able to give good advice to our clients. You can have all the bells and whistles but without this, it’s all going to fall apart.»
Quality-Focused Sector
And the quality of this advice is increasingly being scrutinized, especially by ultra-high net worth (UHNW) clients who are demonstrating growing interest not only in financial outcomes but the process behind it.
«UHNW clients have matured significantly even in the last decade and they have clear expectations for banks today such as what it stands for, what kind of advice it offers and the frequency in which it offers this,» Laxminarayan said.
«Within discretionary portfolio management (DPM), we’ve seen UHNW clients take even more time and effort to understand how money is managed such as reasons for de-risking or leaving an opportunity on the table.»
Playing Catchup
Although Laxminarayan admits that there are still gaps to be addressed by traditional private banks to fulfill the increasing demands for digitalized financial services, he is confident that the industry can effectively play catchup.
«Incumbent players always have the strength of competency in the business itself. Where they tend to get outdated most of the time is in the mode of delivery,» Laxminarayan said.
«Today, there are gaps for all of us incumbent players but at the same time, there are many areas where we can catch up and reinvent ourselves very quickly.»
People’s Business
Whether it is about navigating the sensitive areas of death and inheritance within wealth planning or constructing a customized investment portfolio in unchartered waters, Laxminarayan stressed that soft skills remain critical in the private banking business.
«It may seem lame to still say this but private banking, in the end, is still truly a people’s business. You still need to be able to read your clients, adjust your communication, observe changes in preference and adapt to these changes,» he said.
«The new fintech challengers seem to bring three primary competitive factors to the industry: cost, speed and user interface. But they don’t bring any actual knowledge.»
Digital DPM
Julius Baer continues to upgrade its tech capabilities and within the DPM business which Laxminyaran oversees in Asia, it launched a «Mandate Solution Designer» last year which chief executive Philipp Rickenbacher said would «start a new era and revolutionize the way we deliver investment expertise to our clients» during an earnings call in February.
This follows a revamp of the offering five years and the Swiss private bank has since seen DPM assets in Asia grow at a compound annual growth rate of around 35 percent.
Diversity has also increased as investors in the region shift away from fixed income, which traditionally makes up over 60 percent of DPM assets, to mandates invested in other areas such as Asian real estate investment trusts (REIT) or Asian equities.
