Bregman began by focusing on the firm’s thrust towards digitalisation. He explained that the bank has three wealth management Innovation Labs in Singapore, Geneva and Luxembourg. He says that the overall mission is to enhance client experience and draw the client further into the bank’s broad array of offerings.
“The goal is to constantly improve on our products and services,” he reports. “Since nobody can predict exactly what clients want, the best way to improve is to quickly produce an MVP, or Minimum Viable Product, put it out into the market, obtain feedback and then enhance it. We have done exactly this on an app the DPM team and Innovation Lab created in around 30 days last year, which was designed to introduce DPM to clients and get clients to sign up to new mandates.”
The boffins in their labs
Bregman explains that the labs are designed to be entrepreneurial and innovative. Teams comprise of members from business as well as technology and are seconded to the labs from ideation all the way till the development of the solution.
Teams operate autonomously to bring the best solution to life, working with in-house development teams or even external solutions provided by the start-up ecosystem. “It is a great ecosystem that is producing the sort of innovation we had hoped for. The new products come into the myWealth client app, creating a one-stop shop for clients.”
Extending the reach to the clients
Clients bank with BNP Paribas for a host of different reasons, Bregman observes. “Some wish to make use of our round the clock FX trading desk, for example, others are primarily interested in our equity, bond, fund and structured product advisory services, some for alternative products such as private equity, some for DPM, some for our very strong balance sheet and credit offering, and so forth. Whichever client it is, we want them to achieve a better understanding of our very broad and deep platform. We have a large team covering trust, wealth planning, philanthropy and impact investing on top of advisory in liquid and illiquid asset classes, contractual, DPM and so forth.”
Bregman notes that the bank is in the top 10 in Asia and globally in terms of AUM and the drive is to engage the bank’s many clients as broadly across the product and service offerings as possible. “We are also a universal bank,” he notes, “so there are many opportunities to extend clients towards our commercial or investment banking expertise.”
One of the bank’s thrusts for the foreseeable future is to become more digitally efficient. “One area of course is streamlining processes to make simpler tasks less manual throughout,” he elucidates. “That brings cost savings later, it improves diversity and accessibility of products and services, it helps understand the clients better via data analysis, that in turn helps us find or launch the most relevant products and services.”
Looking back to look forward
Bregman explains that the bank can show self-directed investment clients their five-year historical investment return and volatility, and compare these to the average of other clients who have been with BNP Paribas for the same period.
“What we can in general see is that for taking on a little bit of extra risk they have slightly higher returns over those five years,” he reports. “We can plot their risk-returns and then overlay our core DPM mandates, and we can prove that over the same five-year period, from pure investment grade bond mandates to pure equity mandates, discretionary has outperformed almost 90% of self-directed clients and provided at least double the returns at similar levels of volatility.”
One ongoing challenge for banks in Asia such as BNP Paribas is therefore to convince clients that a combination of long-term strategic asset allocation and portfolio diversification works. “But clients in Asia often prefer trading to longer term investing, and as a generalisation a more institutional buy and hold mentality has not yet taken hold,” he reports. “However, there are good reasons for this; history shows us that investors tend to move from a trading culture to a longer-term investment culture over time, as markets become more institutionalised, with greater protection of minority shareholders. This has already happened in Singapore and Hong Kong but less so in many other countries in the region.”
From little acorns…
Bregman and colleagues accept that the majority of the investment related revenues, for years to come, will likely relate to transactions, rather than be recurring revenue. However he goes on to say “we have more and more ways to demonstrate that the general HNW client will benefit from DPM. Accordingly, the growth of DPM has been and remains far faster than for the transaction side.”
Bregman also concedes that large parts of the private banking industry are already commoditised. “Many new products or structures can be copied, and in a rapid way,” he notes. “But image is a different thing. For example, we always rank very high on DPM performance, we are recognised for a particularly strong structured product platform, a powerful FX offering that offers direct access to the FX desk for FX focused clients, and so forth. So, while we are in an increasingly commoditised marketplace, we still differentiate ourselves via our people, products and services. Technology will further enable that.”
Bregman closed out the discussion by focusing on philanthropy and wealth planning. “We always talk about being one team,” he explains. “But what this really means is that we want clients to feel we are on their team, not just selling products and services but also bringing value through, for example, philanthropy and wealth planning services – this often leads to the client feeling a much stronger bond to the bank and to us.”