Reshaping Banking For The New Normal

Since the COVID-19 pandemic began, banks have faced an urgent imperative to reimagine themselves. While wealth creation has remained un-changed, the pandemic has significantly altered the way in which wealth specialists, & relationship managers are interacting with the customers. In our latest episode of Masters-Of Enablement, Nakul Jain, Managing Director for Private Bank, Priority and Deposits at Standard Chartered bank shares his thoughts on "Reshaping Banking For The New Normal”

Kartik: Hi everyone. Welcome to today's podcast on reshaping wealth and banking for affluent clients. I'm sure like me all of you enjoy wealth and wealth creation while wealth creation hasn't fundamentally changed but the way in which we interact with one another and the way in which relationship managers interact with customers to share information and insights has gone through a bit of a change over the last 18 months. Banks on their part are also taking a discretionary effort in making sure that there are more channels of engagement between wealth specialists relationship managers and clients. And for that part, they give all the right information to clients in different ways and create different and novel client experiences so that clients can feel that their wealth is safely protected and more importantly has enormous upside for future growth. With me today to talk about how wealth management for affluent banking has fundamentally changed and how certain things while they remain the same take on a different avatar, I'm very pleased to have Nakul Jain from Standard Chartered bank with us today. Nakul is the Managing Director for Private Bank Priority and Deposits at Standard Chartered bank. Nakul thank you so much for joining us today.

Nakul: Thanks Kartik. It's a pleasure to be here with you.

Kartik: Absolutely. So just to give everyone a quick walkthrough Nakul has been in the banking space over the last two and more than two decades now spearheading multiple leadership roles in various aspects of retail banking not just within Standard Chartered but other banks prior as well. And I thought it would be great for us to have his perspectives on how wealth and affluent banking has changed in the last 18 months. And more importantly, how does he see this space evolving in the next three to four years going out?

So with that Nakul let's start with perhaps a very fundamental question, to begin with.  What is the way in which from your read of the industry the beliefs and expectations of wealth management have changed as far as clients are concerned since the pandemic?

Nakul: Yeah thanks Kartik. I think that's a very relevant question. You know before I jump into really answering how the wealth needs of the clients have changed in the pandemic. I can tell you that the way clients interact with banks has completely changed in the pandemic. And I think that's something that has been a delight. As soon as the pandemic started we realizes a lot of clients who never used to believe in the digital mode of interacting with our ends slowly started to move towards that. And we've seen a sea shift in the way that clients today want to interact with our ends. I think that's been one very big change that we've seen and more and more that's given confidence to the industry to invest more and more in the digital capabilities to make transactions and interactions much easier with the clients.

Very quickly moving to how we see the behavioural trends changing I think one big change that we've seen is the shift from monetization of fixed assets like real estate and gold to financial assets. I think that's been one very big change move from more traditional banking products to comprehensive and contemporary banking solutions including risk management lending and state planning. also, a lot of experienced investors are warming up to some international trends and ideas like investing in ESG disruptive technologies and provable diversification through international funds. Also, I think there's a huge gap in planning for retirement. Despite over half of the consumers expecting to retire before 65 a third have not even started saving yet. Despite anticipating depending on investment income in the retirement space that clearly suggests that there's a huge gap in the current actions and future expectations.

Kartik: Right.

Nakul: Um I think some of the other things are sustainable investments. A lot of H and I's have preferred philanthropic solutions. Um, many of our clients have started to worry about legacy to support future generations internationalization that is not just looking at one country but looking at across borders to invest and of course, finally, you know the whole private and the business needs are intermingled. So clients are looking for one solution from their banks.

So I think these are the key changes that we are seeing with our clients. Also, the fact that clients are happy to look at a digital solution whether for investments or for their servicing needs. I think these other key changes that we are seeing in the way clients are looking at their wealth needs post-pandemic.

Kartik : Very interesting.  Nakul it sounds like with this whole change in how we do business in general what I hear you saying is there is a sea of opportunity out there both for clients to capitalize on as well as for banks in the wealth management space to sort of take advantage of the right. So you talked about the movement from fixed assets to other financial assets. And also the fact that now as things become more digital opportunities to also partake in and enjoy investment upside not just in domestic opportunities but international opportunities is also there and how there's an increased awareness to doing investments in other aspects of what would have otherwise been deemed not possible in areas like sustainable investing is also coming to the fore. Um but tell me um as wealth is also getting transferred between generations right? So we've seen a lot of um money exchange hands between first-time entrepreneurs and business promoters and even people who have in their families accumulated wealth as it gets passed on are you seeing a different priority or a different way in which people one manage and expect their services to happen from companies like Standard Chartered Bank? And what I mean by this is the newer generation is as we all know more digital-savvy for example, and they may also be less loyal to brands than what may be a couple of generations prior to us would have been.

How has all this changed the way in which you are expecting your relationship managers to better have a trusted relationship and be more of a partner in the whole conversation?

Nakul: Yeah so Kartik I think in the coming years trillions of dollars of wealth globally will exchange hands. I think this is going to happen over the next decades to the younger generation. That's clearly something that’s going to happen. Now the younger generations are usually much more aware, educated and have a higher understanding of worldly matters and of course the wealth management issues. I think that's something we have clearly seen.

Many are keen to innovate to entrepreneurship or sustainability in family businesses and in their financial investments. Clearly digital is the new norm for the next generation and you rightly called it out. They want greater control in their hands to analyse and slice and dice. This is exactly what our new wealth management platform which we call the SE-Invest enables them to do.

They need a proposition that talks to them. They need solutions that move with them as they are global hopping citizens. Very comfortable with technology, so technological breakthroughs and how quickly we are adapting ourselves to fast changes is something that we are trying to integrate. I think also many of these clients are very comfortable in phygital which is a mix of physical and digital channels. So they're looking at integrated solutions or what we call tailored solutions. I think banks will also need to have the ability to adopt new technology to adopt open APIs and modify the processes that enable digital transformation. I think with all this also I think the new generation is very very careful about cybersecurity and I think that is something that is a natural need of the hour. And I think banks are really making a lot of effort to invest there including SCB. The entire payment mechanism is also going through a sea change and we see a lot of changes coming through every year in the industry and the environment.

And finally, the traditional forms of communications are being taken over by more digital media consumption on the go. And that's how we would like to communicate with our clients and make life very easy for them. So I think the whole physical channel of communication is moving now to video conferences webinars podcasts.

I think clients are extremely comfortable. So I guess the new generation is very quick very fast adapting, very technological savvy, on the go and really you know ready to take battles in their hands. So  I think very early they're happy to have a relationship manager, that's something we used to see very late in the earlier generations but the new generation is very savvy for RM’s.

So I guess  Kartik. That’s how we see it!  

Kartik: Right. And just to ask you on one point a little bit more in detail right Nakul. So you mentioned that the whole mode of communication and interaction is now phygital.  I remember back in the day and this is not too long ago right, where you would expect a wealth manager or RMS to meet you at your office or in your home and sort of walk you through these detailed market commentaries, charts and analytics to sort of giving you a rundown of where the market is heading, what are the opportunities as they see it and whatnot. I can also imagine some of these conversations being a bit challenging in a digital environment and for that matter, the other complexity like you rightly called out today's generation of new-age investors or wealthy people looking to grow their wealth are also savvy in perhaps doing certain things on their own you know through self-service platforms.

How do you see this changing the DNA of what a wealth specialist or relationship manager needs to do? How does this ability to stay agile and communicate across these different channels become a skill that you are seeing your RMS need to build?

Nakul: Yeah. So  I think what we've done is we've invested um one clearly in digital channels because we appreciated when the entire pandemic happen that this is a need of the hour. So very quickly we innovated and you know within two to three months, first of all, we got the entire service architecture on digital channels and that's something clients really appreciated, we also launched our digital onboarding within four or five minutes in our accounts will get opened. We invested in a single web platform to create an enhanced and consistent user experience. Clients were able to not only analyse their portfolio, customize it and also get market insights on wealth. We also went ahead and invested in our effects online capabilities making it very convenient for our clients who remit funds.

Like I mentioned we added almost 20 new enhancements digitally, clients could you know amend their address, liquidate their term deposits at the click of a button, a lot of the engagements with our clients went online. So I think that's something the relationship managers and the wealth specialist also evolved as time went by.

You know a lot of expert market insights was sent digitally to podcasts, what we call the money insights. That's something that clients really appreciated. A lot of our journeys were personalized, you know we also not only invested in this but we also invested in a lot of client-centric and very nimble data and analytics which really helped our RMS to engage with our clients on the go. Simultaneously I think we invested a lot in predictive modelling and AI, that's something that's really given us a lot of confidence. Finally, I think we launched a capability called the MY RM. It's a capability where the RM can engage with them or rather client can engage with the RM and a series of specialists over the secure platform and close transactions digitally without really meeting physically.

I think these have really given confidence to the RMS and the clients that you really don't need to meet anymore, just for the sake of closing a transaction. I mean a client should prefer to have a cup of coffee with the RM if he needs to, but I think just for his financial needs clients are more than happy to know who's transactions digitally.

I think that's a big change that we are seeing in our clients.

Kartik: Understood. So one of the things I heard you say is that the platforms or the approaches in which clients can interact with RM’s has firstly increased second is certain basic things that they needed as part of their wealth transactions or requirements which earlier necessitated them to let's say come and visit you at the branch can now be done online more seamless. And I think the other thing I heard you say which is a key takeaway is more investment and more focus at Standard Chartered Bank and others have been in predictive analytics in data modelling to try to really understand where is that additional alpha that we can suggest to our clients.

So very interesting takeaways there.

Nakul my last question to you is in the age of hyper-personalization where every client might also have unique requirements which cannot be clubbed and put together as a persona. What do you think are key opportunities as well as maybe some areas of concern that you believe banks need to tread carefully as they look at capitalizing on this new market dynamic?

Nakul: The opportunity is immense. Like I said you know in the era of physical meetings the RM would you know just be able to meet say in a city in big cities like a couple of customers in a day but the way that things have changed today the RM is able to interact with many clients in a day. Also, every client has started to matter, that's something which is a very big chance that we've seen. We started to look at client details very closely, look at analytics around how to engage with clients more meaningfully, invest in our digital platforms to make client’s life easy. If you really ask me in short, the time that is available to the RM and the time that is available to the client both have become extremely precious.

And I think we are able to utilize our times very meaningfully that's one very big change that we have seen.  Some of the key concerns that we are seeing in our investors are clearly on you know on the falling bond and the cash yields clearly investors you know who are debt oriented will need to go up the risk of either by increasing allocations to equities or lowering the quality of bonds on high durations. In our view increasing allocations where equity which does well in the rising growth and inflation environment can really help boost their yields. Pure fixed income clients can be selective in taking risks and raise allocations to corporate bonds with a tilt towards high yielding AA or singularity bonds given the likely revival of the credit cycle and more attractive valuations compared to AAA.

The second concern clearly is around markets and we've seen been seen new highs being hit every day. What is the right time to exit? I think that's something that is a clear concern of our HNIs. In our view, I think sticking to one's asset allocation is the key. During volatile times in general, across all asset classes, investors need to recalibrate their expectations on returns. Overall absolute valuations are rich, fundamentals remain strong and we believe it's a great time for equities. Also, equities are not expensive compared to bonds, cash or even gold. And finally, we are we have a preference for cyclical and value strategies. On gold, I think we believe that 5% to 10% exposure to bold is a safe table for our clients.

And on currency, we believe that over the next 12 months the US dollar is likely to depreciate as a growth recovery broadens to other markets. So that's how we see Kartik some of the concerns of HNI’s and how we are working along with them to answer them.

Kartik: Great. Well, thanks. Thanks a lot, Nakul.

Well, there you have it, folks. Some good sound investment advice also for all of us to pay head to in the next six to 12 months, along with obviously what we heard Nakul talked about which is the changing landscape in how wealth management is considered both from clients as well as from banks like Standard Chartered. We also talked about in the case of new-age investors, digitally savvy investors how's this interaction between RMS and clients likely to change what is already changing and what are banks like Standard Chartered doing to sort of stay ahead of the curve and continue to be a pioneer in the new normal.

And lastly, we wrapped it up by talking about certain opportunities that are there both for us to make money as a potential investor as well as ways and means in which banks can better navigate their clients and give them the right and sound advice. So with that Nakul thank you very much for joining us for today's podcast.

I'm sure everyone will find your insights very valuable and for all of you, watching stay tuned for our next episode. Thank you so much for watching.

Nakul: Thank you Kartik and thank you, everyone. Have a good day.