Alberto Cuccu, Objectway, outlines the specifics of Italy's private banking sector

Alberto Cuccu, Objectway, outlines the specifics of Italy’s private banking sector

The financial institutions have adjusted their service and relationship models by integrating digital interaction and communication tools for private banking customers, writes Alberto Cuccu, chief product officer at Objectway.

In Italy, the digitisation of banking services has for many years been focused primarily on propositions aimed at retail customers (such as payment services or home banking).

The management of large assets had lingered in the past, anchored to a traditional way of managing the relationship between the client and the private banker through face-to-face meetings and without the aid of any collaborative, digital communication solutions.

Heavy investment
Today, it has finally been realised that the need to digitise banking services is also very strong in the private wealth segment. Many private banks are now investing heavily in order to stay abreast of new service level expectations within this important market for banking institutions.

Industry figures confirm this need for digitisation: more than 50% of Internet access stems from mobile devices (and in the private sector the percentage is even higher than in the rest of the market).

Significantly, 40% of Generation X and more than 70% of Generation Y investors use social tools to stay informed and to make investment decisions.

A further 21% of customers in the private segment use YouTube to watch videos on financial topics.

The digital revolution is certainly underway and this process will be accelerated by the fact that over the next 15 years most of the world’s wealth will shift to the “digital natives” of Generations X and Y. The first-movers will be the innovators and the large institutions, then the rest of the market will have to adapt to increasing levels of digitisation.

Variations in service models
The digitisation of investment services in Italy is more or less in line with the rest of Europe, although progress has been reduced by delays in broadband deployment over the last ten years.

These infrastructural delays are, however, largely counterbalanced by the ‘digital appetite’ of the Italians, which has given rise to a widespread and heavy reliance on mobile devices such as tablets and smartphones in our country. The financial institutions have therefore adjusted their service and relationship models by integrating digital interaction and communication tools for bankers and customers.

The chief difference between the Italian service model and that of countries like the UK and the US lies essentially in the investment approach.

In Italy, the approach is still predominantly determined by personal relationships and by the strong presence of financial advisor networks, factors that have slowed the penetration of purely robo-advisory tools. In Italy, therefore, the digital-human hybrid approach will be more palatable and new players are entering into the market, disrupting the private banking landscape.

Example: CheBanca! and its Yellow Advice
A good example here CheBanca!, Mediobanca Group’s retail bank, and its launch of Yellow Advice. The project was carried out with Objectway.

In the past two years, CheBanca! has enhanced its product portfolio, expanding to more sophisticated savings and investment solutions such as asset management (introduced in 2013) and in particular Yellow Advice, the first Italian banking robo-advisor launched in 2016.

This new idea, imported from the US and UK best practices, was devised to provide clients with customised investment recommendations. This service, traditionally available to private clients, has now been opened to all customers by the bank.

Via a new and modern platform, customers can receive bespoke advice in line with their own needs, independently in self-mode or in help mode, with the assistance of an advisor via telephone, internet or in a branch.

The investors provide details of their objectives, and receive investment solutions that match their needs in real time.

The dedicated mini-site also enables non-clients to perform simulations of the service, setting their own objectives and time horizon, allowing them to discover the most appropriate asset allocation.

New frontiers
In the next five years, investment in collaborative or digital communication services for advisors, clients and institutions (such as remote, robo, and hybrid advisory) will be substantial.

The customer will be able to commence his/her own investment experience with a robo-advisor, and then request the consultancy of an advisor for investment decisions (hybrid advisory), or meet his/her advisor through a safe chat, video, or co-browsing facility (remote advisory).

The investment proposals will be e-signed remotely and customers will have access to an online “virtual personal assistant” (VPA). VPAs will be able to dynamically interpret the customers’ requests and suggest adequate investment strategies, based on the information collected via different communication channels.

One thing, however, will not change: the advisor will not lose his/her pivotal role in the consulting process. For the most important decisions, the advisor’s help will remain fundamental, even if delivered remotely.