Banks are hard at work to ensure that when the new MiFID II regulation enters into application, they are prepared. Although the burden is huge, Thomas Piske, CEO Private Banking at LGT Group, sees it positive.
Thomas Piske, an industry insider recently said that the way banks handle regulation can be compared to squeezing a lemon. According to this person, they can either turn it into sour juice or sweet lemonade. How is LGT handling regulation?
One thing is clear: the implementation of the current wave of regulation entails very substantial outlays for all banks. The new duties and requirements lead to additional complexity and risk, resulting in a high additional administrative burden.
But in the end, complaining about it is useless: the regulation is coming and every bank is now tasked with making the best of it both for themselves and their clients.
«This lemonade should taste good»
But to come back to your question: obviously, we want to make lemonade. This lemonade should taste good to everyone involved, the client, our relationship managers and finally, also our owners. If you look at it from that perspective, regulation is a business opportunity.
Can you explain that in more concrete terms?
Essentially, private banking offers three services: wealth management, investment advisory and the simple execution of orders without any advisory services. Most impacted by the regulation is the advisory side. Among other things, cost transparency will be significantly higher. The scope of services and quality of advice will therefore become even more important.
Our goal is to implement the regulatory requirements for advisory services in such a way that they result in added value for all parties. This means that clients will receive even more personalized service, which they can configure in a way to best meet their needs in terms of the scope and intensity, as well as fees.
Will you be adjusting your advisory offering to this end?
Yes, starting at the beginning of January 2018, we will be significantly expanding the scope of our services and will more clearly differentiate our overall advisory services according to the needs of our clients. In the case of traditional advisory services, for example, new opportunities will be created for personalization, and risk monitoring will be significantly expanded.
«We will be upgrading our advisory services»
For clients with sophisticated needs, new options will be introduced for the implementation of specific requirements relating to investment objectives, investment recommendations and risk monitoring. Further to this, in addition to their dedicated relationship managers, clients can also have direct access to one of our investment experts, with whom they can discuss their investment strategy and concrete investment ideas.
Overall, we will be substantially upgrading our advisory services, and the fact that this is a complex service that adds value and involves a lot of expertise will be recognized. Advisory services will have a transparent price tag and clients will be able to select an optimal pricing model tailored to their level of transaction activity. This new way of positioning our advisory services is very positive from the client’s perspective, but also for the relationship manager.
Many fear that the implementation of MiFID will be an administrative nightmare for relationship managers.
We are also developing an entirely new technology platform alongside the new offering to avoid just that. This platform will support our relationship managers across the entire advisory process, for example during onboarding, in preparing investment recommendations, with sustainability assessments, portfolio monitoring or when initiating a securities transaction.
«This will have a far-reaching influence on the work done by the front office»
In the future, many administrative tasks will be significantly easier and more streamlined, some will even become redundant. In the end, thanks to the technological support, the burden for the relationship manager arising from compliance-related tasks will actually decrease compared to today, even despite MiFID II and FinSA. We will therefore be able to substantially increase overall efficiency in the front office.
Does that mean that the front office will work differently in the future?
Yes, the introduction of the new technology platform will have a far-reaching influence on the work done by the front office. The new requirements will be stored in the system as rules and will steer work processes in such a way that they are automatically considered when advisory services are provided. What’s more is that even steps in the work processes that are not impacted by the regulation will be supported.
«Turn regulation into value!»
On the whole, the platform will be a very efficient tool in helping the relationship manager to identify the appropriate investment opportunities for the client. Ultimately, this means that our relationship managers will have more time for their clients and can advise them even better. In turn, we expect this to result in greater client satisfaction as well as higher earnings and acquisition potential for the bank.
I’m convinced that in the end, the new offering and technology platform will not only make work easier for our relationship managers, it will also give us the opportunity to create a true competitive advantage for us as a bank. That’s why our motto is: turn regulation into value!
Austrian-born Thomas Piske studied business administration at the University of Innsbruck and joined LGT Bank in Vaduz in 1986, where he first worked as a financial analyst and investment consultant. During the 1990s, he held several management positions in Private Banking and in 1998, became Head Private Clients and a member of the Executive Board.
He has been CEO LGT Private Banking and Chairman of all LGT private banks globally since 2009. From 2002 until 2012, Piske was also Chairman and Vice Chairman of the Liechtenstein Bankers Association.
