A Quantum Leap in Digital Banking
Things are buzzing around Marco Abele, Head of Digital Private Banking. The digital transformation is a real quantum leap, but it will take time.
Urs Schwarz: Credit Suisse is launching digital Private Banking capabilities. Can you explain what that means exactly?
Marco Abele: We are digitalizing the bank's business and service model. That means that we are completely redesigning the way in which we interact with our clients, the way we provide them with content, and how we partner with them. These new digital capabilities are not just an improvement in the current business model, but a complete transformation. Clients are empowered to actively expand their knowledge, to stay informed and to make decisions themselves, in exactly the same way they are accustomed to – and appreciate – in other areas of their lives. Meeting, and exceeding, these evolving expectations is part of our commitment to serving our clients – both current and next generation.
Why do we need these capabilities when we already have Direct Net?
Direct Net is only available to clients in Switzerland, and it is a traditional one-way online banking system, purely designed for client self-service. Our new digital Private Banking platform delivers something completely different – specifically, a collaborative and interactive platform that is centered around our expertise and experience and complemented by our Relationship Managers (RMs). Clients and RMs are brought together digitally, and this is a real paradigm shift from the previous online banking system.
So cooperation is what makes the difference?
Precisely. We are bringing the human element into the platform. This is in stark contrast to our previous systems, and different from what the competition is doing. While most banks are investing in online solutions, we are investing in interaction and digital collaboration. Although many clients want to make their investment decisions themselves, they still want to have the option of drawing on the expertise and knowledge of an RM.
Which end devices and operating systems are involved?
Smartphones, tablets and desktops. Both Android and Apple iOS. We're starting the rollout with tablet banking because we believe this device is the most suitable one – both at home and on the go – for clients to interact on their wealth management topics. The smartphone and desktop versions will follow shortly after that. The range of possibilities, however, depends on the end device. The desktop will offer the most extensive range of options, because a banking session on a desktop usually lasts longer than on a tablet or smartphone.
Are RMs really in a position to meet these new client requirements?
Of course, they will have active support with this new platform and, yes, they'll absolutely be able to do this. But their role will evolve as clients can also directly contact our specialists on the platform. But RMs will continue to be central in the relationship with their client – more than ever before. And they will always know when their clients have digital interaction with another team member, such as a research specialist.
RMs are often reluctant to involve third parties in their relationships with clients. Are they a little afraid of what is going to happen?
This is part of the evolution of the industry, and RMs will no longer be the clients' sole point of contact. But, as I said, the RMs will remain at the core of the relationship with the client, and Private Banking is still a people-based business. We are far from excluding RMs. These new digital capabilities are not taking something away from RMs; they are giving RMs a new platform to enable them to better serve their clients and manage higher volumes.
This new digital Private Banking platform is intended to enable clients to network. It's been referred to as "Facebook for the rich." What does that mean exactly?
It's right to compare the platform to Facebook in one sense, because this is also how social networks work, but it goes beyond Facebook as it involves not only social contacts but also wealth issues. Our goal is for our clients to network both with experts at the bank and also with other clients. We will start using offline events with this goal in mind. People will be able to meet at an event and then continue the discussion online and keep in touch. Moreover, many clients have a desire for validation of services and products by their peers. This is probably the biggest trend that social media has brought about: I no longer buy a product because the seller's advertising is great, but because I trust the ratings from other buyers. Our new digital capabilities allow our clients to get a second opinion from their network partners before completing a transaction.
The network can also have negative effects.
That's true… it is always possible that some clients may, at some point, use the platform to complain about us, but they can already do that on Facebook or Twitter anyway. If they complain on our own platform, we are better able to react. The prerequisite for this is accurate monitoring of all activities and adequate response management. In any case we should take feedback as an opportunity to better understand client needs.
To what extent will the digital Private Banking platform change the relationship between the bank and its clients?
As I mentioned, RMs will continue to be at the core of their client relationships. The platform that we're creating can really complement the expertise of our RM force, helping us to stay close to our clients. We are simplifying access to the knowledge and insights of the full, integrated bank, so our clients can identify and act on the information that is most important to them, whenever and wherever they choose. This will allow for immediate high-value conversations with their RM, to whom they will have direct access in real-time through these new mobile channels.
Is the DPB platform secure?
Security is one of the three most important attributes for the digital platform: simple, personal, secure. Nowadays people require not only their assets to be secure, but also their data. We are investing a great deal in this area to ensure we are using the most recent and sophisticated technology.
How did you determine what clients need?
In Asia, we conducted over 25 "Voice of Customer" labs to gather client feedback for each development step. Involving clients in the development process is fundamental. It is easy to construct something in isolation that you think will be good for clients. But it is no longer enough to simply hope that it works. Listen first, then innovate. That's the right sequence of events.
The financial sector is gradually becoming a playground for innovative startups and IT giants such as Google and Facebook. How much pressure does this put on Credit Suisse?
That depends on the business line. Retail banking, which is more mass market, is under major pressure worldwide. With regard to payment transactions, for example, the banks will hardly have a chance against these new players. This is in contrast to private banking, where there are very few startups or new players with the necessary understanding of this business. Not least because personal relationships will continue to be a key factor. We don't expect to see any disruption in corporate client business, because it has always relied very heavily on technology. For us, the new competition means that we need to focus on the business lines where we see the greatest growth potential.
Will large companies like Credit Suisse be able to keep up in terms of implementation capabilities?
The support that we receive from the Board of Directors and Executive Board makes us very powerful. The way we are developing now is giving us even greater productivity. We are using the "agile and scrum" methodology, in which you work out solutions with your clients incrementally, rather than spending several months defining what you want your IT department to build before even starting. But that alone isn't enough. Our solution needs to be accepted. It makes no sense to set up a system if nobody is going to use it. Enormous change management focus is needed to change employee and client behavior for good. We receive all the support to make this happen.
It sounds like it will take years to really change the culture.
That's right. We're planning on a time horizon extending through to 2017. And we have the time. Competitors are not going to suddenly turn up overnight and take all our clients.
Theory: Banks will provide essentially the same services, and those that offer the most attractive user experience will survive. Is this accurate?
To some extent. Any bank can create individual features, but the determining factor is how you integrate them and how they help create a unique user experience. However, there is another strategic factor that is as important: partnerships. We can no longer survive alone. For example, in Switzerland, we are partnering with the University of St. Gallen and intend to open an "Innovation Lab" soon, with the goal of pushing forward innovative solutions with selected startups.
The user experience always involves an emotional component. How much importance do you attach to the "fun factor"?
"Fun" is the wrong word. We want to provide our clients with a simple, secure system that is tailored to their needs, thereby strengthening client retention and their commitment to the bank. And if it can be fun, too, so much the better. But we are not looking to become some kind of entertainment store.
What are the three main difficulties in implementing this digital Private Banking platform?
By far the biggest challenge will be change management and getting users to accept the new tools. How can we get our employees and clients to accept, use and really bring this to life? The next-largest problem is technical: If I trigger a transaction, it must be processed, placed on the market, documented, etc. This platform therefore cannot act on its own, but must be integrated into the existing settlement infrastructure. However, that infrastructure is very old and was not designed to offer the kind of flexibility that we need. The third point – you are welcome to write this down – is impatience. I am regularly asked: How can we speed things up? My standard answer is that it's not going to be a matter of twelve months, more like three years at a minimum. Because the competition never sleeps and is also working on digital banking projects, there is a certain impatience within the bank. But the fact is that this is a marathon, not a sprint. We need to have some patience. Trying to do too much all at once will not serve us.
Where will we be in a year on this?
In Asia, we will be the market leader in terms of the digital offering. Since people in Asia tend to react very positively to digital innovations, we expect a significant increase in client numbers. In addition, we aim to go live early in the US and in one location in Europe, and expect positive effects within a year. In Switzerland, the transformation is more difficult because of the host system, which is over 30 years old, and the large volume of business. But I expect that we will see the first fundamental changes here, too, in 2016, for example in the account opening process or client advisory process.