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Cognizant Reports

Asian Private Banks:

How to Embrace Digital Transformation
As Asian investors increasingly use social, mobile and analytics
technologies for their wealth management needs, private
banks must take a digital approach to more effectively deliver
meaningful, high-value-adding interactions and tailored advice.

cognizant reports | october 2014

Executive Summary Derive value by deploying digital. This can
Wealthy clients in Asia are actively using digital happen in a nuber of ways.
tools and are expected to rely more on them in
the coming years for their wealth management Digital-empowered targeting: Banks should
needs. However, private banks in Asia continue tap into the potential of social, mobility and
to lag behind their clients in adopting digital analytics to differentiate their value propo-
technologies, especially social media and mobile. sition. By using digital technologies, they
On the internal front, they face challenges from can understand and target their customers
information silos, a dearth of skilled employees, accurately with customized products and
fragmented operations and legacy systems. services that can be delivered anytime and
Externally, they face regulatory restrictions and anywhere.
threats from lean startups and non-banking firms.
Banks revenues and margins are also being Enhanced customer experience: A unified
adversely affected by rising regulatory burdens, view of their clients can help private banks
talent shortages, increasing client acquisition and spot up-sell and cross-sell opportunities.
servicing costs, and low advisor productivity. Banks should leverage their technology plat-
forms and use the digital information that
To deliver meaningful, high-value advice to clients, customers generate through their online
banks need to gear up for their digital odyssey by interactions and transactions (what we call
taking the following steps: a Code Halo) to deliver unique and cus-
tomized experiences to clients at every
Create a holistic digital banking strategy: touchpoint.1
Banks embarking on a digital transforma-
tion should clearly define their objectives Improved efficiencies: Banks should invest
and create a holistic digital banking strategy in a robust infrastructure, digital technolo-
to achieve them. Banks should evaluate their gies and process automation to effectively
current maturity and readiness levels to build engage with customers on digital channels
a digitally-enabled business and leverage exist- and improve efficiencies.
ing systems. They also need to strike the right
balance between technology and high-touch Why Asian Private Banks Must
advisor services to create a model in which Go Digital
both of these service delivery channels symbi- Investor Reliance on Digital Wealth
otically supplement each other. Management Tools
Asias wealthy are active users of digital technolo-
Manage change: To ensure the success of a gies (see Figure 1). On a weekly basis, they spend
digital transformation initiative, banks should an average of four hours each on instant mes-
manage change and address employees saging and social media channels (see Figure 2,
concerns about such initiatives. next page).2 Many use digital technologies and

Online Activities of Wealthy Asian Customers

Hours per Week

4 3.7
2.3 2.1

Banking & News Social Media General Online Gaming
Investments Research Purchasing
Source: Scorpio Partnership and Sungard
Figure 1

cognizant reports 2
Asian Wealthy Are More Tech Savvy
Time spent on various methods of communication each week.

Average hours per week



Web portal


text messages



VOIP calls
The Americas Europe Asia-Pacific
Source: Scorpio Partnership
Figure 2

channels to track and educate themselves about support their wealth management transactions
wealth management and to select advisers based and decisions.5 For instance, clients reviewed
on online ratings and reviews. Over the next portfolios, checked performance analyses, read
five years, wealthy clients in Asia are expected market reviews and found securities information
to increase their use of digital communications on the online accounts provided by their banks.
(see Figure 3).3
Private Banks in Asia Lag Behind Customers
According to a 2014 Futurewealth Report, 92% There are numerous reasons why private banks in
of the 3,025 wealthy investors surveyed4 world- Asia are playing catch-up with customers who use
wide were going online to learn about and digital tools to manage their wealth. These include:

Rising Use of Digital Communications

How long do you currently spend using the following communications each week, and do you plan to use
these communications more in five years time?

Meeting Secure
Face-to- Telephone Web Social Instant VOIP
E-mail Face Calls Portal Networking Written SMS Messaging (Skype)
much more in five years time

56% 36% 40% 46% 47% 28% 40% 44% 33%

Percentage planning to use

Asia Pacific

41% 24% 19% 31% 23% 17% 25% 19% 19%


33% 20% 19% 30% 22% 16% 19% 19% 28%


4.9 4.5 3.9 3.5 3.2 3.0 3.0 2.6 1.9

hours hours hours hours hours hours hours hours hours

Source: Scorpio Partnership

Figure 3

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Slow adoption of mobile and social media: to run digital technologies across silos,
We studied 21 top private banks operating in they fail to leverage the true inferential and
Asia. Of these, three-fourths do not offer a predictive powers of digital technologies.
full-fledged mobile wealth management
app to their clients. Of the 50 leading global Fragmented operations: Many firms
private banks surveyed by Assetinum in 2012, functional systems architecture lacks
only 22 had a smartphone-optimized Web site, standardization, proper integration and
while 14 banks did not have a mobile app.6 consistent firm-level semantics. Combined
According to a Wealth Briefing report, in 2013 with a lack of a strategic vision for manag-
a significant percentage of institutions glob- ing IT, this results in IT teams implementing
ally did not offer mobile apps and social media tactical fixes without resolving the underly-
channels to help clients communicate and ing issues.
transact. This, however, is expected to improve
in the next three years (see Figure 4).7 Regulatory restrictions: In a study by DST
Global Solutions,9 34% of respondents said
Internal challenges: a key concern was managing cross-border
data to properly classify clients to com-
Skills: With a dearth of skilled analysts, ply with cross-border rules. Further, 42%
private banks are struggling to derive of respondents said a major challenge for
meaningful insights from client data. In a managing client data was complying with
CEB survey, 60% of respondents said it was regulatory restrictions to safeguard client
important to organize data for decision- data when moving across regions.10
making and actionable business analytics,
but only 36% believed their organizations Legacy systems: The pervasiveness of
had the ability to do so.8 legacy systems and low-technology chan-
nels makes it difficult for banks to meet
Organizational structure: The organiza- compliance requirements and service
tional structure at most banks results in clients efficiently. Banks also find it difficult
information silos, with each group owning to integrate the real-time nature of mobile
and mining its own data sets. With many and online services with their legacy,
firms lacking a central team with a mandate back-end core systems.

Digital Revolution Underway

Institutions that enable clients to Institutions that offer clients digital
transact business or issue instructions channels for communication purposes/
through digital channels now and in access to portfolio information now
three years time. and in three years time.

Percent of Institutions





2013 2016 2013 2016 2013 2016 2013 2016 2013 2016 2013 2016

Dedicated Web site Dedicated smartphone/tablet/PC application

Social media (Twitter, Facebook, etc.)

Note: Respondent base includes chief technology officers of firms that cover major wealth management
markets and together have over $1 trillion of assets under management.
Source: Wealth Briefing
Figure 4

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Need to overhaul existing infrastructure: In prerequisite for clients in the digital age. Industry
many cases, poor investment data practices and executives cite industrializing11 the advisory pro-
information silos leave banks with incomplete cess and automating back-end processing and
and fragmented client and investment data. compliance solutions as top priorities for their
This makes it difficult for banks to decipher wealth management platforms (see Figure 6).
and understand customer portfolios. Banks will
also find it difficult to meet the rising demand Use cases for industrializing the advisory process
for an integrated and online client experi- include:
ence unless they overhaul their infrastructure
(see Figure 5). Streamlining the client onboarding process
to avoid multiple data entries.
Business Priorities of Asian
Automating risk and suitability assess-
Wealth Advisors ments when clients order a specific product.
Priority Level Business Activity
Sending targeted product information or
1 Business Intelligence
investment ideas to clients based on their
2 CRM Systems suitability and risk profile.

3 Risk Management Tools Generating a unified reporting view across

4 Financial Planning Tools multiple accounts.

5 Recruitment
New competitors: Lean startups12 and other
6 Investment Research, Market Feeds non-banking firms13 have started offering
automated investment advisory services.
7 Training While they have not yet targeted the
8 Compliance Tools ultra-high-net-worth (UHNW) segment, they
are likely to disrupt the industry in the future.
9 Portfolio Modelling Tools This will put pressure on incumbent players to
10 Branding & Marketing invest significantly in technology just to keep
up with the new entrants.
Source: Scorpio Partnership
Figure 5
Cost pressures from rising customer
acquisition and servicing costs. Banks face
In the absence of robust integration of the digi- increasing costs of acquiring and retaining
tal technology infrastructure in the front, middle high-net-worth (HNW) clients in Asia who have
and back offices, banks will find it difficult to relationships with multiple banks.14 Similarly,
achieve efficiency and seamless operations a the cost of acquiring and retaining talent is

Priorities for Wealth Management Platforms

Percent of repsondents

Grow the front
Industrialize Back-end Automate Product
advisory processing compliance innovation
processes automation solutions
Source: Hubbis audience sentiment poll, Asian Wealth Management Forum 2013, Singapore
Figure 6

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increasing due to a dearth of talent. Accord- Low advisor productivity: The average
ing to McKinsey & Co., private banks cost to number of clients handled by Asian advisors is
serve clients was higher in 2011 compared with 86, which is higher than the global average of
20082010 due to a rise in compensation and 50 to 60 clients.18 The inability to forge strong
reduced advisor productivity, coupled with relationships with clients and the lack of
greater client servicing requirements (see access to productivity-enhancing digital tech-
Figure 7).15 nologies is making it more difficult for advisors
to capture additional client assets. Advisors in
Stringent and complex regulatory environ- Asia have, on average, 20% less assets under
ments across Asia are driving up compli- management than those in Europe.19
ance costs. Regulations such as Basel III, for
instance, hamper banks abilities to generate Gearing Up for the Digital Odyssey
profits using their balance sheets.16 Create a Holistic Digital Banking Strategy
Digital transformation is not just about adding
Revenues continue to be under stress. At 80%, new technology-enabled features or applications;
the cost-to-income ratios of private banks in it is an entirely new business and service model.
Asia are among the highest in the world.17 The Banks embarking on this journey should start
margins for banks are decreasing as clients with well-defined objectives:
deleverage portfolios and opt for simpler prod-
ucts to reduce risk.

Profit Margins in Asia Under Pressure

Basis points (assets under management), 2011

Net Revenues
78 83 78

U.S. Western CEE* Asia**

Operating Profit
77 83 106 84 53

26 24
75 84 103 88 11

68 90 106 99
U.S. Western CEE* Asia**
Operating Costs
67 25 24 56 14
53 59 54

21 20 53 15

26 26 56 20
U.S. Western CEE* Asia**
52 64 50 70
Decrease 2011 levels
51 64 50 73
Increase 2010 levels

42 61 50 79 Stable 2009 levels

2008 levels
*CEE: Central and Eastern Europe
** Excluding India
Source: McKinsey Private Banking Survey
Figure 7

cognizant reports 6
First, banks need a long-term strategy with a our report, Digital Banking: Enhancing Customer
tangible digital blueprint. The digital blueprint Experience; Generating Long-Term Loyalty.)
should be extensible, capable of adapting to
evolving changes in regulations, markets, tech- Manage Change to Ease Transformation
nology, product strategy, client interactions Managing change is essential to the success of a
and engagement. It should also have a client- digital transformation initiative. To start with, top
centric view and specific measurable goals. management should exhibit strong leadership
to drive change across the organization. Private
Second, banks should have a tactical plan that banks should take steps to effectively address any
delivers immediate wins and addresses client concerns or resistance that advisors might have
and internal demands, while helping the bank about digital transformation initiatives by set-
establish its digital presence. Banks should ting up multiple channels of communication and
also develop product, pricing and servicing digital banking champions.
strategies (utilizing digital technologies) to
meet the needs of every client segment. To allay advisor concerns of being disinterme-
diated by digital tools and self-service digital
Third, banks should evaluate their current channels, organizations should deploy digi-
maturity and readiness and focus on how best tal technologies to handle non-value-adding
they can leverage their existing systems to build activities such as administrative tasks, scan-
a digitally-enabled architecture and business. ning documents, sharing client information with
back-end systems and document management.
Digital transformation is not about replacing This will save advisors time and provide uni-
the high touch that associates currently deliver fied views of customers for them to deliver tai-
with digital tools and technologies. Instead, lored advice. Banks should then focus on helping
banks need to balance technology and touch to advisors use the extra time and digital tools
create a model in which both approaches effectively and deepen their relationships with cli-
symbiotically supplement each other. Banks can ents, which will likely result in increased revenues.
combine personal client relationships with technol-
ogy-enabled services to deliver collaborative and The reallocation and realignment of traditional
virtually enriched relationships. This will help responsibilities among departments will require
banks serve clients with a tailored combination of a major design effort. Digital transformation
traditional and digital banking services and offers. initiatives usually involve significant cost and
effort, as well as a potential re-engineering
The agility and ability of banks to adopt processes of systems and processes. Banks should take
and technologies will be vital to building a digi- this into account and carefully redesign their
tally enabled architecture. processes and operations to support seamless
To succeed, private Banks must redefine their omni-channel experiences.
banks should value proposition to clients
fundamentally by using technology to Derive Value
manage and simplify the Analytics, big data, mobile and social media can
shift their mindset complexity of their wealth help banks develop a granular understanding
and focus from management offerings. of their customers and deliver differentiated,
selling products to They should build capabili- value-adding services to them.
ties to efficiently segment
servicing clients. and target key customer Offer personalized products and services:
groups with tailored products using efficient Banks can use the advanced information
distribution strategies. aggregation and predictive capabilities of
analytics to study market trends, correla-
To succeed, private banks should fundamentally tions, factor analysis and what-if scenarios
shift their mindset and focus from selling prod- that can forecast fund performance. They can
ucts to servicing clients. The strategy should also anticipate changes in market conditions,
include a long-term view and commitment as client preferences and cross-selling oppor-
most digital transformation initiatives are multi- tunities. Banks can use analytics to study
year undertakings. (For more on building a road- clients investment strategies and returns
map for a digital transformation initiative, read and select the best of these to generate highly

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personalized offers and information.20 They Banks can serve a highly mobile clientele using
can deploy analytics to identify what custom- mobile technology. Further, mobile technolo-
ers need, such as in-depth analysis that is rele- gies can help banks address the challenge of
vant to their investment portfolio and tailored cross-border data and rules. Banks can use
to meet their risk appetite. Delivering this kind Code Halos to leverage insights derived from
of service in real-time to the right clients can client data by abstracting specifics through
become a strong selling point for banks. segmentation and clustering. They can then
use the location of a mobile device or access
Consider Commonwealth Bank of Australia, point used by an advisor to determine whether
which unified its data foundation by modern- specific information can be delivered or not.
izing its IT systems and strategically invest-
ing in analytics, social media and mobility.21 Target clients accurately: Banks should com-
This capability is allowing the bank to pro- bine their client data (structured and unstruc-
vide personalized offers that are relevant to a tured) from their core systems with social
customers needs. For instance, it offers media content to get a unified and accurate
home loans and insurance products to clients picture of their clients. Approximately 70%
who visit its site after searching for proper- of HNW clients in Asia look to validate their
ties online. Similarly, the bank also collects wealth management decisions with their peers
and analyzes transaction and other data to using social media.22 Banks can leverage this
determine appropriate products with the right behavior by deploying targeted marketing
pricing for its customers. campaigns and sharing their latest insights
and research with clients via social media
Serve clients quickly, anytime/anywhere: platforms. They can also connect clients who
Mobile tools can improve the quality of service share common interests. For instance, Jyske
and advice, streamline the sales process and Bank, a Danish private bank, makes heavy use
save time for advisors (see Figure 8). Through of social media to engage with, update and
improved presentation of data and insights, build online communities of customers.23
mobile tools can help advisors deliver a high-
quality client experience. Advisor productiv- As clients in Asia place more importance to
ity can be improved by deploying front-office peer feedback and word of mouth, banks
tools that are accessible anytime and any- should use social channels to build their brand
where. Query processing and data retrieval and develop advocates from their client group.
can be performed quickly using comprehen- Private banks should identify prospective
sive analytics and reporting tools. clients using their public profiles that can offer

Tools Begin to Matter

Advisors find mobile tools boost their effectiveness and efficiency.
Percent of respondents




Improves Improves Improves Saves me time None of the above
advice quality service quality sales process
Ineffective Effective
Respondent base: 1,422
* More than one response allowed.
Source: CEB Wealth Management Advisor Benchmark, 2012
Figure 8

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insights into their lifestyles, major milestones that can tell them accurately what their cus-
in life and interests. Banks can also use such tomers need. This can be achieved through the
data to determine high-value clients to pur- smart management of digital information, the
sue. They should leverage their existing client use of advanced analytics and the integration
base to see if they can provide introductions of digital channels.
and recommend their contacts or acquain-
tances with high net worth. Jyske Banks Banks can use gamification to simplify interac-
online TV station, a key differentiating feature, tions and make routine tasks fun and engag-
provides advice about market trends, asset ing for employees. Gamification can also help
management and investments to its custom- banks educate clients on wealth manage-
ers through expert interviews. In addition, the ment and encourage desired client behavior.
TV channels Web site allows customers to Consider FlexScores online investment advi-
interact with each other and pose questions sor tool that leverages gamification to engage
to experts. The bank also offers an iPhone app clients and explain goal-based wealth planning
for clients to manage their accounts. to them.24 Consumers are awarded a numerical
score between 1 and 1,000, which reflects their
Enhance customer experience: Investors seek financial health. Users are awarded points
the same kind of highly personalized, seamless for their actions, such as reading articles
and consistent experience from banks as what about investing. The tool visually explains how
is provided by companies outside the financial harmful financial decisions can decrease their
services industry (think retail, media and enter- score. (For more information on how gamifi-
tainment, etc.). To provide such experiences, cation can help businesses, read our report,
banks should learn about their clients from Gamifying Business to Drive Employee
every interaction to understand and anticipate Engagement and Performance.)
their needs accurately. Banks should leverage
their technology platforms and make use of Improve efficiencies: Private banks should
Code Halos to deliver unique and customized focus on building a robust infrastructure and
experiences to clients at every touchpoint. automated processes to effectively engage
with digital customers and improve efficien-
Private banks must then adopt enterprise- cies. This will require banks to integrate
wide approaches to manage and share client systems, processes and data in the front-,
information to improve the flow of and access middle- and back-offices. Banks will also
to information by all stakeholders to improve have to rewire their back-end systems to
client servicing. Advisors need to be equipped support the capabilities they want to deliver
with customer insights, tools and capabilities through digital channels. This will help them to

Benefits of Big Data for the Front Office

Front Office Capture Analytics Visualization Examples

Aggregated data provides a unified

CRM view of customers/prospects (i.e.,
linking customer data to the CRM system).

Firms can combine data sources to

Trading help discover, develop and test trading
ideas and strategies.

Data from multiple asset classes and

longer time horizons can help portfolio
managers improve performance.

Access to aggregated data can provide

Reporting better insights into reporting systems
across the firm.

Key: Indicates significant interest in a particular feature of big data

Source: Celent
Figure 9

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accurately trace orders and fully automate internal departments and experts to clients
and control processes. It will also enable using mobile technologies.
orders to be handled consistently, reduce
error rates through reduced manual interven- Improve revenues and reduce risk: Banks
tion and boost the rate of straight-through should aim to restructure their systems
processing (STP). Automation of processes to perform more targeted, effective and
and digitization of data will result in improved relevant data mining. By eliminating silos and
regulatory reporting and help create efficien- focusing on centralizing data and integrat-
cies that can balance high compliance costs. ing disparate systems, banks can update and
unify client information across their systems
Private banks can also offer clients self-service for real-time retrieval and usage. Addition-
digital tools to manage their wealth. Online ally, banks can create opportunities to up-
portals, video, e-mail and social media can help sell and cross-sell their offerings by using
banks more efficiently build sustainable cli- insights gleaned from client data (see Figure 9,
ent relationships. Banks can reduce costly previous page). Access to and the ability
face-to-face advisor interactions by provid- to view client data across silos can enable
ing clients with interactive self-service tools. advisors to generate 47% of revenue from
Similarly, video-based tools on mobile devices new sales compared with 36% for advisors
can be used to serve clients anytime and any- who do not have such access.26 Banks can also
where. Low-cost digital channels can reduce reduce their operational and reputation risk by
the cost of operations and providing advice, using big data to understand their customers
while continuing to provide interactive com- better and improve their investment research
munications.25 Banks should focus on com- and trading capabilities.
bining and providing the expertise of their

For more on Code Halos, see our book, Code Halos: How the Digital Lives of People, Things, and Organi-
zations are Changing the Rules of Business, by Malcolm Frank, Paul Roehrig and Ben Pring, John Wiley
& Sons, 2014, or our white paper, Code Rules: A Playbook for Managing at the Crossroads, Cognizant
Technology Solutions, June 2013,
Stepping Into the Communication Age, Scorpio Partnership, January 2013,
Survey respondents had an average worth of $2.9 million (USD).
The Futurewealth Report 2014: Upgrading the Service Delivery, Part 2 Scorpio Partnership, March 2014,
Social Media Survey Private Banks 2012, Assetinum, 2012,
Technology and Operations Trends In The Wealth Management Industry, Wealth Briefing and
Advent Software, 2013,
How Client Data Can Transform Sales, CEB, May 2013,

cognizant reports 10
DST Global Solutions Ltd., a wholly owned subsidiary of DST Systems Inc., provides technology solu-
tions and services to the world's top financial institutions, utilities and communications companies.
Maximise Investment Data In Asian Wealth Management, DST Global Solutions and Hubbis, 2013,
Industrializing means to streamline and automate the interactions between advisors, clients
and processes.
Dragon Wealth and Wealthfront.
Baidu, Alibaba, Google, PayPal and telcos.
Asian Private Banking: Today's Boiling Frog? A. T. Kearney and Newtone Associates,
Navigating the New Era of Asian Retail Banking, McKinsey & Co., July 2013,
The Evolution of Wealth Management, The Banker, January 2012,
Private Banking: In the New Era, A. T. Kearney and Newtone Associates,
Embracing Digital: A High Stakes Revolution in High Net Worth Client Management, Sungard and
Scorpio Partnership, 2012,
Tens of Thousands of Private Bankers Needed In Asia, Execboard in Asia, September 2013,
Private Banks Get Ahead with Analytics, Computerworld, March 2014,
More Personalized Banking through Big Data and Analytics, SAP, September 2013,
Asia Private-Bank Technology to Follow Netflix-lite Model, Euromoney, February 2014,
Social CRM in German Retail Banks, Bearing Point, 2011,
A New Planning Tool for Advisers Challenges Clients to Win a Game, InvestmentNews, May 2014,
Global Wealth Management Technology Spending to Reach $32bn by the End of 2017, Ovum
Knowledge Center, December 2013,
How Client Data Can Transform Sales, CEB, May 2013,

cognizant reports 11

Author and Analyst

Aala Santhosh Reddy, Senior Researcher, Cognizant Research Center

Subject Matter Experts

Aamod Gokhale, Director, Consulting, Cognizant Banking & Financial Services
Amar Devasthali, Manager, Consulting, Cognizant Banking & Financial Services

Harleen Bhatia, Design Team Lead
Suresh Satyavarapu, Designer

About Cognizant

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