The world's largest wealth management house sets out its approach to technology and digital channels, sometimes a controversial issue as traditional private banking models face new challenges.

UBS, along with many of its counterparts, is looking at how to adjust its business model as technological innovations such mobile devices and cloud computing spread their influence. In recent months, the market has been abuzz with talk also about the rise of so-called “robo-advisors” – forms of automated advice – raising questions as to how this could affect traditional private banks and their cohorts of often highly-paid RMs.

Less controversially, perhaps, technology can be a way that advisors can get more out of their relationships and be more effective in handling client demands, particularly in large geographic regions, such as Southeast Asia.

This publication recently asked UBS to set out its digital strategy. Answers come from Dirk Klee (chief operating officer of wealth management and head of innovation/digital strategy, and Andreas Kubli, from UBS in Switzerland.

Can you go into a bit of detail about how advisory channels at UBS are being affected by technology?

Dirk Klee:

We have to make it easy for our clients to communicate with us. Technology should first and foremost be seen as a means to an end. We must use digital technology so as to enhance the personal relationship between clients and their advisors, rather than replace it.

Clients, particularly the new generation, want more than just product-driven innovations. They want constant access to the services of their bank, wherever they are. The new generation, which grew up with the internet, has completely different expectations as regards their relationship with their bank.

Clients of tomorrow demand virtual interaction and a significantly greater say over how their investments are structured. This is what they are used to in their digital world and in other areas of life, such as communication on Twitter and Facebook. They want simple, quick access to all information, similar to what they experience with Google or Amazon. They also demand greater transparency and the option to compare products at any time. In short, they want everything to be available at all times.

Technology allows us to enhance the content we provide clients and in what form. Technology also opens up the door to new solutions and portfolio optimisation never seen before.

For example in 2013 we introduced a new digital advisory solution as part of our digitalization strategy. The product – UBS Advice – is offered at a flat-fee and is focused on our bank's core competencies. UBS Advice guarantees the quality of the client portfolio and ensures that clients remain on the predefined course with respect to achieving their investment objectives. Here, portfolios are digitally reviewed and monitored in a structured manner.

This complex process is supported by a comprehensive front-to-back offering within a robust framework covering several jurisdictions. Compliance and risk management are also integrated in this process.

Through the use of these digital tools, UBS Advice is able to review over hundreds of thousands of portfolios overnight and can quickly identify deviations from the defined investment objectives.
Our advisors can then discuss the recommended amendments to clients in a target manner and, if required, implement them straight away.

Since the launch of the service in 2013, clients have already invested in excess of SFr15 billion ($17.1 billion) of invested assets to date.

What will UBS' wealth offering look like in five, 10 years' time? How will UBS ensure that clients, even the more tech-savvy ones, continue to get a "human touch" in their relationship with the bank going forward?

Dirk Klee:

Digitization is a key strategic priority for UBS' Wealth Management business globally. It gives us new competencies that offer added value for our clients.

In the future, products will look very different. There will be new and better ways of looking at things. We firmly believe that know-how, content and expertise will remain distinguishing and differentiating features of UBS Wealth Management. The investment and advisory business will transform into a high-tech and high-touch industry, one in which clients choose the points or channels through which they want to receive our services – just like in other areas of everyday life.

At UBS we plan in scenarios, what are we delivering now and what will the client expect from WM in three to five years (UBS WM Innovation Lab established for this purpose) and even look as far as 20 years (UBS Y Think Tank). We closely follow the technological developments and have invested hundreds of millions of dollars to enhance our digital capabilities and integrate new innovations. We have put in place systematic and structured processes in order to drive the innovation process.

For example, "WM Innovation Central", which is based on an intranet platform, allows employees in our wealth management units to share their suggestions and comments. A steering committee, which also comprises external specialists, reviews these ideas in terms of their feasibility and compatibility with the business strategy.

Can you elaborate a bit on the so-called Artificial intelligence aspects of such advice? How much of an advance does this represent? What will the client experience be like as a result?

The recent UBS Innovation Challenge in APAC was organized to identify new technologies around Big Data, which will help us deliver personalized content to each of our clients.

We are currently in the pilot phase of a new platform that will be released in Asia in April 2015.

It will deliver a holistic solution to enable transparency to clients across booking centers and to enable clients to access virtually any market that is relevant to their portfolio. There will be a strong personalization and targeting of content to individuals through analytics (for example, daily updates tailored to clients' portfolios in terms of risk-adjusted performance and UBS's recommendations).

In rough terms, what sort of financial/other resources are UBS devoting to this area in the next year or so?

We see digital and innovation as a critical piece of our strategy and invest heavily into those areas (hundreds of millions).

Can you go into a bit of detail about how advisory channels at UBS are being affected by technology?

Andreas Kubli:

Multichannel is a key element of the strategy for both Wealth Management and UBS Switzerland. Accordingly, we invested significant amounts in digital channels which are safe, seamlessly integrated and which completely correspond to customer needs. One example reflecting our ambition to be Switzerland's leading multichannel bank are the new functionalities on our existing UBS e-banking platform, available from 2015 on. The improved UBS e-banking offers profound investment advisory by seamlessly combining personal advice with innovative digital delivery. The following features will be introduced next year:

- UBS Advice clients get immediate and personal notifications on any possible portfolio quality issue as well as tailored remedy ideas on how to bring their portfolio back in line with their strategy. Thereby, we can ensure high portfolio quality.

- Clients with investment mandates have better information on their portfolio

- Easy-to-use reporting features

- The possibility to accept and confirm documents online

- Technology also changes our other channels. For example, all our wealth management client advisors are equipped with iPads that offer interactive profiling tools, calculators and access to documents for the client meeting. We also made first steps to interact with clients via chat, video calls, and social media as an extension of our traditional service line via phone. On top of quality in each channel, ensuring consistency across channels is key here.

Generally, our goal is not to offer only a wide array of high quality digital solutions. We want to link these offerings together, integrate them, so that the client has a comprehensive multichannel experience.