Habib Bank’s CEO for Wealth Management on the Need for a Business Model Paradigm Shift
Salman Haider of Habib Bank AG Zurich
Apr 5, 2022
When Hubbis held its first live event since early 2020, we were pleased to welcome Salman Haider, Chief Executive Officer for Group Wealth Management of Habib Bank AG Zurich as an expert speaker on the first panel discussion of the day, which focused on the development of the wealth management markets in the region. We have extracted some of his valuable ‘bird’s eye views’ for this short report, centred on the need to evolve the business models, to focus on client centricity rather than product selling, on wealth preservation and succession planning rather than simply investing, and on nurturing the right approach to talent and advice. And to achieve all this, he advises a fundamental change in the compensation models and business approach.
Salman’s first words were to thank Hubbis for organising the Forum. “We have been on this journey together for some time,” he said, “and I think you play an important role in challenging the industry, debate issues, and all of that is valuable in helping the whole industry refine its approach and innovate,” he said. “So, I am pleased to be here in a live event and on a panel of experts today. And we are here as the fears over the pandemic diminish, and of course, during the past two-plus years, there has been much progress on many fronts in our business, and none more so of course than technology and digitisation.”
The region is moving fast
He said that in the Middle East and globally, digital and digital platforms have evolved to significantly change the face of our industry and the ways we interact with clients, which is all very important as the democratisation of wealth and investments taking place globally and in the region gathers momentum.
He observed that the second core development he had witnessed in the region is a shift towards more effective, robust estate and succession planning.
Preservation and planning
“I work for a 60-year-old commercial bank, which is still family-owned, and we're building out our HNW and UHNW private bank offering,” he reported. “And for them, who are already very wealthy, we focus heavily on the preservation of wealth for themselves and for their next generations. And strong, well-devised wealth and legacy planning are essential.”
Stepping slightly back from the emerging trends, he observed that the Middle East still today is a long way behind other regions in a variety of aspects, including technology and the spectrum of products and advice available, as well as talent and delivery.
Change is afoot
“The big banks haven't really changed much over 30 years, but things are changing fast, and we are being forced to think differently,” he said.
“Our challenges are the same in any private bank environment - cost to serve, cost to serve, cost to serve. As this great trend towards commoditisation takes place, we need to evolve, and we need to differentiate.”
Salman reacted to a question that probed the credibility of the region, and whether it might become a safe haven for all types of unscrupulous characters and ‘dodgy’ money.
Careful who you onboard
“For any bank and any region, you must be very, very clear on whom you bank and why you bank them,” he stated. “We all know how vital KYC and AML and cross-border conduct are; these are things that keep us up at night. I do think the region needs to be careful, as global wealth centres like Singapore, Hong Kong and of course Dubai and Abu Dhabi, thrive on reputation and branding. It's really important for them to be able to avoid getting into grey areas and murky clients.”
Tailwinds for wealth management
He turned his focus to disruption in the wealth space, which began at the bottom end of the wealth spectrum, but that has emerged increasingly in the wealthier levels. “We're fortunate we have tailwinds in private wealth creation and diversity,” he said, “but every space you're operating in gets a little tighter all the time. For us, our target market is clients who are liquid, with assets of perhaps USD20 million to probably USD100 million, but we still need to be highly competitive and differentiate ourselves from the market.”
Talent, Salman observed, is one area that is particularly challenging. “We see all the announcements, especially in Asia, of banks and others hiring thousands of RMs and advisors, but where will they find them,” he wondered.
“If you asked me to find 100 bankers in Dubai, I could pull together a pretty decent posse of a few bankers, but I'd be very worried about finding more. In short, talent is a huge issue for us. Along with the regulatory challenges, this is the most important challenge the industry faces today.”
Client centricity first
He explained that as to the business models, the industry is moving increasingly towards client centricity rather than product-selling, and as it does so, compensation models must evolve to reflect a different basis for success. The industry has to pivot in the next five to seven years, or we risk being left behind completely as disruption takes place and also as the independent wealth management community gains in numbers and strength.”
The star is rising
He observed that the UAE’s star was rising. “The environment has gone from foreigners coming in to build things, to building and staying,” he said. “The UAE today sees itself as a very formidable hub for having talent based here and covering multiple markets, and I do believe that's going to be an increasing challenge in Hong Kong and to an extent Singapore. But although regulations on entry and competition locally have liberalised, it is not open shop, and the UAE regulators are still absolutely focused on the quality of business that you want to set up and how you want to do business here. There is a very viable marketing model here of being able to cover the region.”
More competitive, more compelling
He said the authorities see that the region can win business from centres that traditionally service the region from outside, for example, Asia and Switzerland and London, but they will continue to be vigilant to ensure that the right businesses and individuals are leading the way.
Salman closed his observations by focusing on some of the attractions of the region for talented bankers and others.
“People can organise a golf game without worrying about checking on the weather,” he quipped. “If these bankers have clients here, and this will always be a good source of clients, but Dubai isn't a booking centre. The quality of life is certainly good, and there is increasing variety and diversity in all areas.
The talent pool must deepen
His final comment harked back to his earlier observation on talent and compensation. “I really do think this is key to the future,” he said. “The right culture of the organisations looking ahead requires us to shake ourselves up and change the compensation models,” he stated. “If we're going to go to clients and sell them products and there's a direct remuneration element to the person selling that product, you've got a fundamental problem with your business model. You need to be client-centric, and to do so, you must change and change significantly.”
Chief Executive Officer - Group Wealth Management at Habib Bank AG Zurich
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