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Vontobel committed fewer mistakes than its rivals, which helped the bank remain profitable in tough times. But new challenges have emerged that the bank needs to adopt to, says Vontobel Chairman Herbert Scheidt in an interview with finews.asia.

Herbert Scheidt, you have been at Vontobel for more than 17 years, with the past eight years as chairman. How do you see your role at Vontobel in a broader context?

I still have many ideas for what we can do at Vontobel in future. We have put the bank on a solid footing and created a good framework for the future.

Of course, we all make mistakes, but perhaps we made fewer mistakes than others. It helped us generate reasonable profits even in difficult times, for instance during the financial crisis, and we have paid a handsome dividend in every year.

«There won’t be an end to the digital revolution»

Now, we are being challenged by exogenous factors again, in particular by digitization. Overall, we have to keep the bank adaptable if we want to be equal to the changes.

Is Vontobel in a new phase already? Or rather, have you concluded the last cycle?

Typically, you will only realize that you’ve concluded a phase ex-post. Nowadays, phases tend to overlap. There is no hard cut.

For instance, there won’t be an end to the digital revolution. Progress is keeping on for ever. It is something that affects the whole organization of the bank. That’s why we have to keep asking ourselves, whether we have the proper structure.

And what is your conclusion?

We are well positioned because we invested in our technological infrastructure years ago. But we can't rest on our laurels, that’s for sure. Nowadays, it is all a question of ecosystems and a change in customer behavior.

Please explain.

In an ecosystem, everything revolves around client demands and the person with direct access to the client. An example would be the broker in a real estate transaction. He serves the primary client demand for supplying a property. In the ecosystem, the broker will also be offering financing, renovation, and relocation services either by directly or through his network.

As a financial service provider, we have to ask ourselves, how and where we position our ecosystems. What are we going to provide ourselves and what are we leaving in the hands of specialists.

«The idea that the client doesn't belong to you alone isn't new to us»

We are orchestrating, partnering or delivering – depending on the case. It isn’t merely a question of selling a product, but of providing the right service at the right time and the right place to the customer. This is a challenge for the entire banking industry. It is a question of value chains put together in a new way. That’s what we need to think about and where we have to explore new ways.

It is to our advantage that at Vontobel we always have had partnership agreements, for instance with Raiffeisen, Helvetia, but also with ANZ or Bank of Singapore in Asia. The idea that the client isn’t always yours alone isn't new for us.

Will traditional banks disappear in a few years given those aspects?

Yes and no. There is a range of basic needs that won’t disappear in the future either. Trust and security are such needs, another basic need is convenience. At our firm, a lot is currently focusing on convenience.

Once there is a higher level of uncertainty, as we currently are witnessing, the primary need will focus on trust and security again. These are basic needs that we meet as an established and regulated company.

«Banks have always been exposed to change»

But to come back to your question. I’m not one of the prophets claiming that everything will change and banks will disappear. It is more about meeting client needs.

In principle, banks have always been exposed to change. Have they always been the fastest in doing so, compared with other industries? I don’t think so.

Why?

Size as such is no competitive advantage anymore because effects of scale aren’t as important. Size means more complexity, and complexity, in turn, reduces the agility of a company.

In other words, more financial service companies will disappear in the coming years?