During a recent visit to Julius Baer's offices in Singapore, this news service spoke to the head of the bank's innovation laboratory about the work he and his colleagues are carrying out and where it might lead.

When Thomas Edison’s laboratory was founded in California’s Menlo Park back in 1876 – the inspiration for General Electric’s Bell Labs – the idea of creating an “innovation factory” took hold. Potent 20th century examples include Silicon Valley, and the “Skunkworks” aerospace testing facility, both in California.

Labs are, or can be, the places where new ideas and processes take glorious shape. Not always the clichéd rooms full of white-coated scientists in protective hats, test tubes and electronic devices, a lab is a term that can apply to any place where ideas and concepts are tested out. In some cases, they’re a regular office where people swap ideas – lots of them. 

Three years ago, Zurich-listed Julius Baer, which calls Asia its second home market, added to this lab trend. The wealth manager set up an innovation lab in Singapore at its office in the central business district. The reason – if a bank does not innovate today, and fast, then upstarts will eat its lunch. 

Headed by Jonathan Chan since December 2021, the lab explore new ideas, tests them against problems that need fixing, and then arrives at solutions that can be scaled across the organisation. Chan and colleagues are carrying out this work when fintech and trends such as AI, blockchain and new communication channels (interactive video) are changing what had been a fusty business. That, at least, is the idea. Chan's title is head of global innovation and it is a position he relishes.

“We’re not here to build what is the latest and greatest tech, but see how we can apply these innovatively to solve our problems,” Chan told this publication when it visited the bank’s offices a few weeks ago. (Chan reports to Emily Midwood, the head of enterprise management at Julius Baer.)

“We have a core team of colleagues comprising specialisations in design, product management, engineering, data science and we are supported by a wider network of technology experts across the bank,” he said. 

The lab operates in three main areas, varying in time horizons. In the shortest term, the team looks at Julius Baer’s existing capabilities that can immediately address these problem statements; secondly, the lab examines what can be deployed within a period of three to five years; and third, Chan and colleagues examine disruptive innovations that might pan out over a period of five to seven years. An example of the latter would be quantum computing, Chan said.

Measures of success, including building and transferring innovation use cases to develop scalable digital products and services, can be scaled globally across the bank.

Pace of change
This news service’s visit to the Singapore office came a few weeks before the launch and publication of the 12th edition of the WealthBriefing Tech and Ops Trends in Wealth Management 2024 report. The report, which has been produced in conjunction with the Alpha FMC consultancy, shows that the sector is going through major changes, using new technologies to become more efficient, delivering more personalised solutions to clients, and improving their experience. 

In one of the most significant results, the authors of the report note that after the investment and progress seen in the past two years, respondents gave their firms an average score of 5.3 out of a maximum of 7. This result is an improvement from the 4.7 result achieved in 2023, making it the highest average score since 2021.

Innovation labs have been quite a feature of banking in recent years, as shown in a WBA feature back in 2016, for example. Banks that have recently joined the fintech revolution to set up such innovation “labs” or “hubs” include Deutsche Bank, HSBC, Standard Chartered, Citi, and ABN AMRO. In London, the FinTech Innovation Lab, an organisation exploring new tech ideas, raised millions of dollars. Its partners included Bank of America Merrill Lynch, Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan, Lloyds Banking Group, Morgan Stanley, RBS (now NatWest), UBS, Santander, Société Générale, and Intesa Sanpaolo.

What's trending
An important task for the lab is to examine any trend in technology or business models that might affect Julius Baer and wider wealth management, Chan said. 

After the initial validation of a trend, the next stage is to see if a supposed new technology or set of ideas has solved a problem, or if it is simply a solution in search of a problem that does not exist. The team does this with an open innovation lens partnering both with colleagues within the bank as well as the external innovation ecosystem. For example, the team is working together with DIFC Innovation Hub and Euroclear on a white paper on the Future of Inheritance where the hypothesis is that tokenization could play a pivotal role in enabling the wealth transfer of the future. Chan said. 

The process of moving from an idea to being used in a bank’s daily business involves four stages: Ideation (short workshops where the team is asked what problem(s) the bank wants to solve); validation (a two to eight-week process of testing and checking, writing necessary software, etc); incubation (testing ideas with a relatively small group of bank users to see whether an idea can be taken to the next level); and finally, a pilot project (launching an idea in a controlled way across the bank before a decision can be made to go fully and, officially, live.)

Crucially, the whole process from start to finish requires the lab team to talk constantly to other people across the bank. Dialogue is a big part of what powers the process.

Not all of those working in the lab have a banking or financial sector background. “I look for people who have a passion for solving problems,” Chan continued. Some of the team have worked in startups, some in fields such as architecture, or have been entrepreneurs. 

Experimentation is relentless. Chan gives the example of tests that the lab has done on the use of non-fungible tokens, for example. And Julius Baer is doing a lot of experimentation work on the use cases of AI, such as multi-agent approaches. (This is where several intelligent agents work together to solve a problem. Such an agent can be a robot, a software program, drones, sensors, etc.) 

The lab adopts a venture building approach. This is, according to (suitably, an AI-driven explanation), a “structured process for creating new businesses by turning ideas into products and startups.”