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Monday, October 19, 2015 3:53 AM ET
Industry insiders see robot-driven services as future of Asian private banking


As your yacht approaches Capri, your iPad lights up with a video call from your private bank relationship manager on a market opportunity. Knowing your tastes, he recommends the best Italian food on the island and makes arrangements for friends to join.

This was one scenario involving private banking services as described by Francois Monnet, COO of Asia-Pacific private banking at Credit Suisse Group AG. But for the industry insiders at the 25th Private Banker International Global Wealth Summit in Singapore on Oct. 16, there is also another scenario, involving cut-throat, bottom-line, robot-driven services that let the rich make their own plans, including where to eat and with whom.

Frank Troise, senior vice president at Infinity Partner, got discussions at the summit rolling with a bold set of predictions about the future of private banking services.

"There will be a robo adviser, not a relationship manager, for investment tips; no trading or brokerage fees; and no one will earn 200 basis points on anything," Troise said on a panel, which also included Monnet.

Others on the panel strongly defended the financial adviser role, including James Aylen, head of UBS Evolve, UBS Group AG's center for design thinking and innovation, which looks at the future of banking.

"We do not see the relationship manager position as one that fades," Aylen said. "It will change in nature, of course, as technology changes."

But Troise had another warning for the current model of private banking. It will not necessarily be clients that seek lower fees, but regulators. He expects regulators in the next few years to try and lower fees, which are now in the 100- to 200-basis-point range.

Monnet said, however, that fee structures may change even sooner. His view was echoed by Peter Kok, regional head for ASEAN at Standard Chartered Private Bank, who discussed the changes coming down the pipeline in an interview with SNL Financial.

"It is certainly possible that all brokerage and transaction fees will go and that there will be an AUM fee of 1%, more or less," Kok told SNL. "That may be easier in many ways for private banks."

But Kok said that advice remains central to the role of a private banker, and in his own role, that means acting more like a consultant. "Sitting down with a client and discussing risk is an important service, probably the most important for a private banker," he added.

Still, Asia remains ground zero for private banking growth. Total AUM in the Asia-Pacific region rose by 12% year over year to US$1.542 trillion in 2014, from US$1.373 trillion, according to a study conducted by Private Banker, which also ranked private banks by AUM for high-net-worth clients with investable assets of more than US$1 million.

The survey saw UBS claim the top spot for the third year in a row as the largest private bank in the region, with AUM of US$272 billion in 2014. Citi Private Bank was ranked second in 2014, while Credit Suisse was ranked third. Meanwhile, the "big mover" was DBS Group Holdings Ltd.'s private banking arm, which saw its AUM rise 35% year over year.

DBS Group said Oct. 16 that its high-net-worth AUM and AUM for all wealth customers came to S$92 billion and S$133 billion, respectively, at the end of 2014. In the first half, its wealth management AUM grew 6% and currently stands at around S$141 billion.

The Singaporean bank also has its own robot-type services, employing the supercomputer abilities of IBM's Watson to scope out investment tips. Tan Su Shan, DBS Bank Ltd.'s group head of consumer banking and wealth management, said the bank has "taken significant steps to enhance the digital delivery of [its] financial and banking capabilities to [its] clients."

As of Oct. 16, US$1 was equivalent to S$1.38.

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