How do distributors tackle the game-changing challenges that lie ahead?
Els VERHOYEN – Head of Savings & Investment Services at ING Belgium
Roel HUISMAN – Chief Retail Banking Officer at TMB Bank PCL Thailand
Christian PELLIS – Global Head of Distribution at Amundi
Moderated by Nick FITZPATRICK – Group Editor of Funds Europe Ltd
Banks and other distributors and asset managers face great challenges from regulation, digitalization, and the need for constant innovation. How can these be addressed, and how can challenges be turned into opportunities?
CONVINCING SAVERS TO INVEST
Els Verhoyen opened by stating that her main objective is to move retail clients from savings to investment. Speaking from the Asian perspective, Joel Huisman had a similar concern, but in a more immature market where he first must raise awareness of the investment market in general.
On the problems of MiFID II implementation, Ms. Verhoyen, stated that ING will follow the “dependent” approach, giving a selection of products to their clients. It partnered with five asset managers to help make clients feel comfortable about investing, and so it can continue to receive trailer fees. Concerning Thailand, where MiFID does not apply, Mr. Huisman, thought that certain elements might be copied by Thai authorities in what is still a relatively unregulated market. If regulation increases transparency and enhances understanding of investments for customers, he would be in favour. Overall, he believes in the open architecture principle, because it gives freedom of choice to customers and creates competition among asset managers.
« It is going from savings to investment that is the main topic for the time being. »
CONVINCING PEOPLE TO INVEST
Asked how Amundi can compete in this environment, Christian Pellis underlined that the solutions and services Amundi can provide are as important as the products; together they are tools to make the client move from cash into investments. “You must convince people to move out of cash for wealth preservation and generating income to preserve buying power,” he asserted. Ms. Verhoyen, on the other hand, emphasized simplicity. ING offers a limited range of products and investment plans and explains them in simple terms. The situation is similar in Thailand, added Mr. Huisman, but you must first educate people to make them understand that investing is not like gambling.
« We need to be there with the client throughout the product life cycle; to test whether the product is right for the client; and to make sure that the people selling the products are well-trained. »
DIGITAL ENGAGEMENT IS A MUST HAVE
With millennials reaching maturity and coming into money, socially responsible investing is also taking centre stage, said Ms. Verhoyen. This is changing the products ING offers, as well as its communication. While face-to-face advising still has a role to play, digitalization is increasing. However, social media, while important for millennials, is still of limited use, since official communication and documents must meet regulatory approval. In Asia, added Mr. Huisman, the challenge is the same: how to reach out to new target groups, in this case the growing middle class, as well as millennials.
To reach both groups he suggests becoming part of the mobile platforms they use, with an attractive brand and hassle-free banking, and providing relevant information on retirement and wealth accumulation. Data analytics from these platforms can provide the insight and understanding of customers no longer available from face-to-face meetings. In Asia, where customers are willing to share their social media profiles and data, this is easier than in Europe. Based on these analytics, TMB can provide the right kind of client coverage and solutions. An advantage is that digital-based analytics takes less effort than the face-to-face method. In Europe, countered Ms. Verhoyen, such analytics would likely be blocked by regulators for privacy reasons, or by the ingrained idea that you need personal interaction with customers.
Concerning distributors in the changing environment, Mr. Pellis stated that with MiFID II, they must accompany the client throughout the product life cycle. Moreover, they must ensure that the product is right for the client and that the sellers are well trained. For this, Amundi’s Training and Digital Advisory Tools are useful.
HUMAN ADVICE OR ROBO ADVICE?
Ms. Verhoyen emphasized that automating services as much as possible is important, but that the client should know that there is a still a human available for specific questions. “Robo-advice” could work in an environment where you do not have people around, but would be the next stage after smart digital tooling. Mr. Huisman, contrasted this with the Thai environment, where only a minority of customers rely on advice given by the bank, while a growing number like to transact on their own. This could be called robo-advisory, but it depends on how you define it, he said.
« … recent research found that 71% of millennials basically said that they would rather go to the dentist than go talk to their financial advisor. »