Wednesday, December 31, 2014

A happy New Finance 2.0 Year for all!

Lets get Finance 2.0 Switzerland as well!

Lets grow our community!

Looking forward for many valuable inspiring encounters and interactions, may it be online or offline

Sunday, December 28, 2014

Finance 2.0: Big Data at Swiss Banks, Shortcut equal the Road to Ruin!

Without doubts, big data has a tremendous potential to revolutionize client advisory and client relations at banks together with all the other components of Finance 2.0.  Since big data is only a part, the other components of Finance 2.0 need to be understood before heading forward. It is about improving client interactions in the first, the second and the third place. There is no easy way. It means hard work and an active presence in the Finance 2.0 world and in the social networks is required.  As tempting it might be to take a shortcut on the Finance 2.0 road directly to big data and leave all those other cumbersome aspects behind as risky it is as well. 

An article by the Swiss news portal FinewsUBS and Credit Suisse: "Big Brother" in Client Advisory (in german) has inspired me to write this blog post. Obviously in public and client opinion the risks and disadvantages are seen as bigger than the advantages of big data. This has to be taken seriously. It seems that UBS and Credit Suisse who have not yet fully arrived in the Finance 2.0 world head straight forward to the easier to measure big data area. Moving fast is good, taking shortcuts might deliver the opposite result of what they hope for though!

Big Data is like Gasoline, it can power a Car or blow it up

It is not enough to understand how to explore and foster oil and produce gasoline. It is also important to handle it the right way and to understand how an engine and a car works, else it is very dangerous. Also big data is very powerful, but a lot of knowledge is needed about big data in general and above all about the whole Finance 2.0 environment. As gasoline in the wrong hands, big data can cause damage.  In the wrong hands means, people with too little knowledge but also people with the wrong intentions. Finance 2.0 is about fulfilling client’s needs at its best not to find new ways to sell more profitable products. If that is not understood it’s too early for big data.

An old Sales Rule: Sympathy before Trust before Benefit applies also in this case

The rule says if one want to advise a client, want to sell something, first the potential client needs to have sympathy for the sales man. That is always the first step. It does not make sense at all to move ahead before there is no sympathy. The next step is to win the clients trust. As much as one would like to talk about benefits, it is meaningless if the client has no trust. Certainly if used the right way clients could benefit a lot from big data, only potential benefits do not matter as long there is not enough sympathy and trust. Remember the survey, when clients said they would rather talk to their doctor than to their bank advisor.  In the lately published Credit Suisse Worry Barometer Swiss asked about whom they trust the most, banks rank 16th place.  With all Finance 2.0 elements combined and with active and honest interactions with clients, sympathy and trust can be reached. Unfortunately sympathy and trust are only the first two steps and do not pay money but cost time. That is maybe why banks and companies in general tend to limit their activity and their effort in this area and focus more on activities which seem to promise benefits relatively soon. Again the problem is that the first to steps are essential for sustainable success in the future. This is valid for the offline as for the Finance 2.0 world. If that is not understood, it is too early for big data as well. 

Clearly the tremendous amount of data banks are holding is a huge competitive advantage towards technology companies such as Google and Facebook.  This could save Swiss banks from loosing ground significantly. Only, rushing ahead, taking shortcuts without building a Finance 2.0 culture, without having a sound understanding what Finance 2.0 is all about and focusing on big data too strongly and too quickly, could result in the opposite. Instead of increasing client loyalty and gain new clients, clients might be driven away in to the arms of smaller none bank companies. It might support the development that in the future clients will decide by service and will not have one bank that handles all their needs but a number of services from various providers.

Sunday, December 21, 2014

Finance 2.0 New Year Resolutions for Swiss Banking CEOs

Finance 2.0 New Year Resolutions for Swiss Banking CEOs
Finance 2.0 New Year Resolutions for Swiss Banking CEOs

Dear CEOs of Swiss Banks, the end of the year is near. In case you have not found any New Year Resolutions below I would have some ideas. As always there are many things we want to make better in the new year. An area where you certainly have room for improvement is Finance 2.0.

Open a Twitter Account and build a Community

 Opening a Twitter Account and build a Community
Opening a Twitter Account and build a Community

With Finance 2.0 it is like with investing in stock markets you can read books over books but to really understand it you must be active and gain experience in the real world. That is why you should open a twitter account in your name. I assume you agree, that a CEO of a bank needs to understand the markets. With Finance 2.0 it is the same. The topic is too important to relay 100% on others. You have no time, your afraid to do something wrong? If Obama found a way to be active on Twitter you really should too don't you think? A number of Banking CEO's are already on Twitter. Check it out! List of Banking – Financial Services – Insurance Senior Executives on Twitter .  If you want to here it from other Banking CEO's why you should be on Twitter please download The Top 10 Community Bank CEOs on Twitter Report

Make Head of Digitization a Member of Management Committee

In a Finance 2.0 Bank Head of Digitization belongs in the Management Committee
In a Finance 2.0 Bank Head of Digitization belongs in the Management Committee

If you don't have yet a Head of Digitization, nominate one. Finance 2.0 is not at all purely IT. A significant part of it is Business. It is all about client interaction hence you need a person who connects the two worlds. Finance 2.0 has to be a significant part of the banks strategy. As a consequence the Head Digitization belongs in the management committee. 

Have a Finance 2.0 Expert in your Board

A Finance 2.0 Expert in the Board
A Finance 2.0 Expert in the Board

It is only logical. The main responsibility of Board members is to develop or at least sing off and monitor the bank's strategy. Since Finance 2.0 should be an important part of the strategy, there should be somebody in the driving seat who is an expert. There are enough good people available you just need to reach out.

Start to think in Processes for Finance 2.0 and not in Channels

Finance 2.0 : Think in Processes
Finance 2.0 : Think in Processes

Decide on Finance 2.0 Channels or on tools and then assign them to an according business field is like putting the cart before the horse. This approach generates little efficiency and quality improvement and certainly no leverage. Define which process has priority and then decide step by step what activity is needed for improvement and based on this decide which tool you want to use. Offline and online activities need to go hand in hand.

Get Head of Compliance to have a Twitter Account as well

Head of Compliance at Swiss Banks has to have a Twitter Account as well
Head of Compliance at Swiss Banks has to have a Twitter Account as well

The main problem is, that Compliance has mostly a limited know how of Finance 2.0. They very often only see the negative aspects and potential risks. It is key that Compliance gains experience and knowledge and starts to understand that the chances exceed the risks. More on this in my blog post And if compliance were Finance 2.0’s best friend…and the other way around?

Train your Employees on Social Media and let them use these media

Swiss Banking Employees should be well trained on Social Media and be allowed to use them
Swiss Banking Employees should be well trained on Social Media and be allowed to use them

You can buy and implement Finance 2.0 software within months, but creating a Finance 2.0 culture takes years. Therefore start training of your employees as soon as possible if not started yet. On one hand you reduce risks of wrong handling but above all you benefit from a massive potential. You still think employees posting on company topics is a to big risk and too much could go wrong? Need I to mention the things which went terribly wrong on employee side within the last years?  Stolen client data, huge trading losses, Libor & Forex manipulation etc... The risk with Finance 2.0 employee activities seems defenitely smaller

Be a Finance 2.0 Innovator and not a Follower

Be a Finance 2.0 Innovator and Leader
Be a Finance 2.0 Innovator and Leader

We only see the top of the iceberg. We only see about 5% of how Finance 2.0 can change our life and are still in the error an trial face. Of course it is important to see what others do but just to copy them and not risk to try something new is bad. Everybody is just experimenting and if it really works we will see in a few years. Only because a product, a Finance 2.0 strategy doesn't work for a bigger competitor doesn't mean it won't work for you. Therefore, don't follow, lead!

Dear Swiss Banking CEO's I am looking forward to seeing your Finance 2.0 Strategies for 2015. These are challenging times but they bring big chances as well. Finance 2.0 is one of them. I hope sincerely you are going to grab these opportunities.

Sunday, December 14, 2014

Finance 2.0: God help, Swiss Private Bankers say, Social Media and Cloud completely nonrelevant!

Ernst & Young report on  Digital Disruption and the Game-Changing Role of Technology in Wealth Management
From Ernst & Young report on  Digital Disruption and the Game-Changing Role of Technology in Wealth Management

What puzzles me when I read the Ernst & Young’s survey on Digital Disruption and the Game-Changing Role of Technology in Wealth Management is not that Social Media and Cloud have no relevance and Finance 2.0 as a whole has little relevance. That is not a surprise. I figured that out all by myself without a survey on Swiss Private Bankers. What scares me is that the top priority areas are exactly the ones, which could benefit significantly from Finance 2.0, Social Media included. This shows that many decision makers at Swiss Private Banks have not yet understood what Finance 2.0 or Fintech is all about

20 - 30% of "old" Swiss Banks will disappear
20 - 30% of "old" Swiss Banks will disappear

First of all it is not really a helpful approach to split up into various tools and channels such as mobile devices, social media, cloud etc. What is the difference in-between an app. such as WhatsApp and e.g. Facebook anyway? Almost 50% of users access Facebook via app as well. The key purpose and benefit of all these technical elements is interaction with clients, employees and with other stakeholders. So if a selection is needed, classification should be conducted by purpose such as, who do we reach, type of interaction etc. and not by tools. So dear Swiss Banks, instead of tools let’s talk about Finance 2.0, which is also including Social Media.When defining a digital strategy, deciding on activities with specific focus on channels is likputting the cart before the horse.The base always should be a bank processes as for example the advisory process.Then for every step of the process it should be evaluated and decided whether this part of the process can be supported an improved the best way with offline and/or online activities and which specific actions should be taken.

The Finance 2.0 Advisory Process for Swiss Private Banks
The Finance 2.0 Advisory Process for Swiss Private Banks

Compliance is Swiss Bankers biggest Concern...

One part of compliance is to protect clients. Compliance wants to ensure that banks manage that clients understand investment products well and that they understand above all their risks and what it means for themselves. It was certainly well intentioned by the regulator and by compliance officer. The result though is that clients are now bored to death with piles of paper they have to read and sign, which is extremely time consuming for banks. Unfortunately not much is solved with that. It is rather a vicious circle. Client advisors need their time to go through all that paper work and are lacking of time to respond on clients real needs and help them to understand markets better. Financial literacy is an important area. Here a number of aspects of Finance 2.0 help to deliver to Swiss Bank Clients the exactly needed information, when they needs it and in a user-friendly and well understandable way. A good example how in the new Finance 2.0 world financial literacy can be improved is fintool , till now only in German. More about Finance 2.0 in compliance can be found in my blog "And if compliance were Finance 2.0’s best friend…and the other way around? " 

On the other hand there is the part of compliance which ensures that the big number of legal and tax regulations will not be violated. Also this is extremely time consuming and with the number of heterogeneous clients hard to do. A Finance 2.0 company who has good solutions to approach all kind of compliance challenges is swissQuant Group 

New Swiss Digital, Finance 2.0 Institutions will arise
New Swiss Digital, Finance 2.0 Institutions will arise

Other important areas for Swiss Private Banks are Front Office Processes and Improvements ....

Exactly here client interaction or interaction with potential clients is essential. As mentioned in the beginning Finance 2.0 tools can be a strong leverage, when combined with offline activities and its far beyond than just furnishing the front people with some fancy apps. 

It is a fact that there are not enough clients in Switzerland to replace all the assets under management from offshore clients which decreased significantly. The new markets are the onshore markets in the emerging countries. That is no problem for UBS and Credit Suisse. It is though for the majority of Swiss Private Banks, because effort and costs are to high. Here new models are needed. It can not only be done with Finance 2.0 but Finance 2.0 can, it must be an important part. In order to build relations one must be onsite, but being onsite online via Social Media is a valid possibility too. You doubt it? When I decided to focus business wise on Brazil back in 2009 I did not know anybody in São Paulo. Before I went there I built up a network on Social Media. Like this I could accelerate my strategy significantly when I finally went to São Paulo in 2010 . Due to my social media activities I met my current Brazilian partners which grants me a very strong foothold into the Brazilian financial sector. As of today I run their European operations. All this was initiated by social media of course coupled with extensive offline activities thereafter.

Social media is also extremely helpful when a bank wants to get in touch with potential clients or just want to strengthen their brand. No I am not talking of advertising on online channels. Again and again its about interaction. Interaction can be boosted when banks involve their employees. A good example is Credit Suisse to show what the could have done if.... The other day Credit Suisse did a google hangout with some external experts. I find it an excellent idea, unfortunately they head only 40 viewers. Of cours because nobody new about the hangout. Just imagine with what power Credit Suisse could have spread the information about the hangout by there employees through twitter... if they had built a culture where employees tweet and post actively on Social Media about their employer. Unfortunately Credit Suisse's strategy seems to be the opposite. 

Lets talk about defining risk profiles and investment strategies for clients the Financ 2.0 way. That a questionnaire is only of limited use has been figured out by most. Also an online simulation "What happened if you had invested in these asset classes" is by far not the perfect solution. A powerful way to get clients more in a situation which is closer to reality and would allow to analyse clients behavior in a better way are online games --> Gamification. Read more on this topic on my blog Companies should use gamification, banks must use gamification!

Cloud has been an other area which is of no importance to Swiss Private Banks. Cloud is an essential area of Finance 2.0. An example here for a tool which is using the cloud and provides an important value for the investment decision process of a Swiss Private bank is PHYNARY SYSTEMS . That system provides highly sophisticated quantitative portfolio analysis and construction, comparable with industry leaders just for a sharply lower price...because they use the power of Cloud.

These are just a few examples. Finance 2.0 has a large number of options to support Swiss Private banks. It can be apps, proprietary social media or public social media, cloud, gamification, blogs and so on. Of course a number of other areas and processes other than the front can be boosted by Finance 2.0. On the back-office side the Bitcoin technology will change the world for instance.  Don't forget we see currently only the peek of the iceberg, there is much more to come!

Dear Swiss Private banks now it is on you to decide. Do you want to be one of the 20 to 30% of the banks which will disappear as Sergio Ermotti predicted this week or do you want to arise like the phoenix from the ashes?  

Please through the right switch at the right time! By the way the right time is now...more than right!

The Way forward for the Swiss Finance 2.0 Banks
The Way forward for the Swiss Finance 2.0 Banks

Personally I believe, that Sergio Ermotti is right. 20 to 30% of Swiss Banks will disappear, but I also believe that new Swiss Finance 2.0 institutions will arise and that in 10 years the Swiss Financial Sector will be bigger than today. 

A German Summery of Ernst & Young’s survey on Digital Disruption and the Game-Changing Role of Technology in Wealth Management you can find on inside-it

Sunday, December 7, 2014

Im 19. Jahrhundert war es eine Ehre für die Kunden einer Schweizer Bank zu arbeiten

Dieser  Satz stammt aus einem Interview, welches  Hans Vontobel, Ehrenpräsident der Vontobel Gruppe  vor einigen Tagen gegeben hat.  Ebenso inspirierend sind die Auszüge aus Claude Bauman‘s Buch über Robert Holzach  ehemaliger Verwaltungsratspräsident der UBS.  Mein erster Gedanke war, eigentlich wüssten wir was richtig wäre.  Ich möchte deshalb hier einige Punkte aufgreifen.

Der Banker muss dienstleisten (Robert Holzach)

Dies sagt sowohl Holzach wie Vontobel.  Hier geht es in erster Linie darum, dass ein Banker es sich zur zentralen Aufgabe macht, die Bedürfnisse der Kunden zu befriedigen.  Die zentrale Frage ist nicht, was eine Dienstleistung für einen unmittelbaren Ertrag abwirft.  Hierzu Hans Vontobel „ Die grösste Fehlbeurteilung unserer Zeit ist, nur den materiellen Erfolg zu sehen.“  Der Dienstleistungsgedanken geht bei Robert Holzach noch weiter. Der Mensch stand bei ihm im Mittelpunkt.  Dies bezog sich auf Kunden wie  Mitarbeiter  aber vor allem auch auf die Menschen, zu welchen die Bank keinen unmittelbaren Bezug hat.  Genau letzteres wäre heute umso wichtiger. Die Finanzmärkte sind z.B. viel globaler und komplizierter geworden.  Es wäre im ureigenen Interesse der Banken mitzuhelfen, dass jedermann  und jedefrau die Märkte besser versteht.  Wenn der Kunde bereits beim Kundenberater ist und Geschäfte tätigen will, ist es zu spät und den Kunden Dokumente im Umfang eines Romans unterschreiben zu lassen der falsche Weg. Möglicherweise ist man mittlerweile wieder davon weggekommen in erster Linie an die Erträge, statt an die Kundenbedürfnisse zu denken.  Leider geht es heut bei der Interaktion mit dem Kunden vielfach darum, der Compliance Genüge zu tun und einmal mehr geraten die effektiven Kundenbedürfnisse in den Hintergrund.

Robert Holzach

Langfristigkeit ist wichtig (Robert Holzach)

Die meisten, die bei einer Bank Budgetverantwortung tragen, werden hierfür nur ein müdes Lächeln übrig haben.  Ist es doch so, dass regelmässig gegen Ender Jahr oder schon etwas vorher die Budgetkürzungsrunden daher kommen.  Dies ist vor allem bei den börsenkotierten Banken so, da natürlich die Erfolgsrechnung einen Einfluss auf den Aktienkurs hat und dieser so denkt man, auf das Vertrauen von Kunden in die Bank. Hmm, möglicherweise waren es in Vergangenheit andere Aspekte als diese, welche das Vertrauen in Banken geschmälert haben. Die aufgrund von Budgetkürzungen gestrichenen Aktivitäten und Projekte werden dann vielfach zu einem späteren Zeitpunkt mit neuem Budget wieder aufgenommen bzw. wieder bei null begonnen, nur um sie dann gegen Ende Jahr teilweise wieder zu sistieren.

Damit einem Banker und Vorgesetzen vertraut wird, muss derselbe an sich glauben, sich aber regelmässig hinterfragen und an sich zweifeln (Hans Vontobel)

Es scheint, dass es einige Top-Banker gibt, die das Vertrauen innerhalb und ausserhalb der Bank schon längst verloren haben.  Da die Fähigkeit an sich selbst zu zweifeln nicht vorhanden zu sein scheint, wird dies  von denselben wohl gar nicht erkannt und das Trauerspiel  wird sich noch weiter in die Länge ziehen.  Wie es geht, hat für mich Ossi Grübel eindrücklich gezeigt nach dem zwei Milliardenverlust der UBS. Der Verwaltungsrat wollte, dass er noch einige Monate bleibt, Ossi war es sofort klar, dass er die Verantwortung übernehmen und unmittelbar zurücktreten muss. Zur Bankenführungselite noch ein weiteres Zitat von Hans Vontobel: „Die heutigen Entscheidungsträger sind keine guten Lehrmeister für die nächste Generation“

Hans Vontobel

Ich komme zurück auf den Titel dieses Blogposts. Ist es auch heute noch eine Ehre für eine Bank zu arbeiten und Kunden zu dienen? Für mich persönlich war es das, als ich 1990 aus Überzeugung meine Bankkariere bei der UBS gestartet habe und ist es bis heute immer geblieben. Liebe Bankerkollegen denkt daran, andere zu ändern ist praktisch unmöglich. Ihr könnt jedoch selbst mit gutem Beispiel vorangehen und andere mitreissen. Es ist schwierig aber es ist möglich. Dies gilt für alte Werte aber auch für neue Denkweisen und Trends. Go for it!  An alle, die sich Bankenbashing zum Hobby gemacht haben, ein nicht unwesentlicher Teil war/ist gerechtfertigt, eine differenzierte Betrachtungsweise wäre hier jedoch wichtig und auch zielführender