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Three blessings in disguise that COVID-19 gave the Asian private banking industry in 2020

COVID-19 has brought unprecedented challenges to the global economy and caused many disruptions in our daily lives. But every cloud has a silver lining and quite a few industry participants have shared with Asian Private Banker throughout 2020 that the pandemic has accelerated a number of trends and has removed obstacles to change. Here are three positive changes triggered by the pandemic in 2020.

Reimagining client engagement

The most obvious change must be the acceleration of private banks’ digital agenda, centred on reshaping client interaction now that the pandemic — with its social distancing measures and travel bans — has made it harder to organise face-to-face meetings, which used to be essential to private banking. “Many so-called cardinal rules of private banking have been broken during COVID-19,” Vincent Chui, chief executive, Morgan Stanley Bank Asia, shared at one of Asian Private Banker’s Leaders Week Webinars. Chui added that the squeeze in execution commission is already happening, with industry participants — especially the newcomers — pooling investments into electronic trading platforms.

Indeed, private banks with online trading functions in place recorded surges in transaction volume on their digital platforms in March and April, when the market experienced most volatility. Private banks with the capability to provide direct execution but hesitant about “switching on” such function for Asian clients, prioritised its adaptation into the region, after the digital trading capability proved its worth over the course of the pandemic.

Besides direct execution capabilities, keeping multiple channels open for client-banker interactions is essential to keeping in touch with clients in volatile times and ensuring that they are kept abreast of relevant investment ideas.

“A high net worth individual might have, say, six private banking relationships,” opined Mark Wightman. The EY partner, ASEAN industry leader and APAC advisory leader, wealth & asset management, told Asian Private Banker that this is the time for digital-savvy banks to shine if they are able to offer “timely, relevant and holistic” advice to clients.

Will Lawton, head of QUO, a US-based order and execution management systems provider which operates TradingScreen, said the pandemic is the opportunity for Asian private banks to magnify their existing capabilities using technology to better customise and aggregate client advice, while catching up with their retail and virtual banking peers on their digitalisation progress. Core banking platform provider Avaloq strikes a chord with Lawton, in its view that technology is there to enhance instead of replace the role of human advisors in private banking, as human advisors offer trust and personal touch which is sought after by clients, especially in crises such as a pandemic.

More flexible working arrangements WFH is possibly the most used acronym in 2020, with social distancing measures adopted during the pandemic forcing the majority of private banking staff to stay away from their office desks.

From the start of the pandemic, banks arranged temperature checks and imposed travel bans in an effort to limit the spread of the virus. As both Hong Kong and Singapore government’s implemented tighter social distancing measures, private banks had to resort to split teams and WFH arrangements and had to confront basic issues — such as finding enough laptops for the majority of the workforce to work remotely, or dealing with cybersecurity and compliance issues regarding client data and record keeping.

Positive specifically for private banks with a traditionally more rigid Asian office culture, the pandemic has encouraged a greater use of telecommuting and other digital tools “thereby driving a collective shift towards acceptance of digital channels and flexible working”. This bodes well for the possibility that the change in work culture will be maintained post-pandemic, and will mirror work practices in some Western countries.

It is worth mentioning that private banks have enjoyed the support of regulators over the course of the pandemic. The Monetary Authority of Singapore (MAS) in February urged banks to step up business continuity plans and offered extensions in timelines for submitting regulatory reports and deferring policies implementation to allow financial institutions to focus efforts on emergency arrangements for coping with the pandemic.

As the situation stabilised later in the year, MAS came up with plans to prioritise local talents in job recruitments, to incentivise financial institutions to adopt digital solutions and to encourage the creation of new jobs in key industries including private wealth management.

In Hong Kong, the Securities and Futures Commission (SFC) urged licensed corporations to report major operational changes made due to COVID-19 disruptions. The Hong Kong Monetary Authority (HKMA) has provided guidance to banks on the provision of investment services through non-face-to-face channels such as video or teleconferences, and worked with the SFC in facilitating the electronic provision of product documents and trade documents for investment services.

An opportunity to get closer to clients For some, the pandemic has been life-changing as it presented an opportunity to rethink their life priorities. For clients who suffered from the economic downturn, private banks could certainly leave a positive impression by offering a helping hand when needed, as Lynn Hermijanto, managing director, Southeast Asia wealth management coverage at Deutsche Bank Wealth Management shared with Asian Private Banker in November.

The pandemic has led to changing career plans and financial plans with more bankers deciding to work and live closer to home and wealthy families shifting wealth onshore to guard against the possibility of an urgent need for a transfer of funds at a time of any future global travel ban.

Lee Wong, Lombard Odier’s head of family services, Asia told Asian Private Banker in an interview in May that the pandemic ties in well with clients’ hopes and fears. Hopes to secure family wealth and to create a lasting legacy — and fears of wealth erosion and conflicts within the family when unfortunate events happened to the patriarch or matriarch. The pandemic has led to increased inquiries about wealth planning from clients who don’t have an estate plan in place yet and other clients who would like to review their succession plans.

Probably linked to the theme of rethinking one’s life priorities, Asian clients have shown greater interest in ESG themed investments throughout the pandemic, as they focus on environmental, social, and governance (ESG) issues, instead of being notoriously and single-mindedly focused on returns. Sustainable investments have gathered a “significant momentum” and sustainable multi-asset portfolios have been some of the fastestgrowing investment solutions at UBS .

Last but not least, the distressed times have reminded the more fortunate ones to do good for the needy. Private banks introduced philanthropy schemes aimed at helping the underprivileged in society. Some of the banks made donations to fight the pandemic as a contribution back to the society in times of need.