Interview with Andreas Kubli The age of the universal bank is yet to come

Digitization is sparing nothing and no one, and banking is no exception. Are the banks keeping up with all the changes?

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Mr. Kubli, technology giants like Apple and Amazon and telecommunications providers such as Orange and O2 are expanding into the banking industry with innovative solutions. As a banker, does this give you sleepless nights?

We have brought a great many innovative solutions to market ourselves in recent years. A glance at the App Store ratings helps me sleep easy, but it is essential that we do not rest on our laurels.

But dark clouds really are gathering on the horizon for the banks.

The banks are indeed seeing client expectations increase rapidly, a trend which is ultimately driven by the big technology companies such as Apple, Google, Facebook and Amazon. Their influence on today’s consumers has become impossible to ignore and it will not spare the financial industry, either.

Local solutions will give the domestic banks a very good opportunity to succeed.

So Google and co. do give you sleepless nights?

No. I see digitization in the banking sector more as a process of evolution than as a revolution. It is essential for banks to react to the rapidly increasing client expectations with innovative solutions. If they can succeed in doing so, I am confident that banks will continue to play an important role in the Swiss financial market in the future.

The question is whether they will succeed. Aren’t the Googles and Amazons of this world too powerful to be taken on?

Local solutions that are tailored to the Swiss market will give the domestic banks a very good opportunity to succeed. Take TWINT1, for example: we now have more than 600,000 registered users and half a million transactions per month, and the numbers are rising all the time.

In a country with a population of eight million, those figures still aren’t anything special.

If you consider that we only started last year and are currently undergoing a period of strong growth, the figures do make me optimistic. Contactless payment by card also needs time to become established.

Why are local solutions a good opportunity for banks?

Network effects can be achieved locally. Ricardo and TWINT are excellent examples of this. We are also relying on a Swiss solution for eID. This has advantages for everyone. From the perspective of clients, for example, data protection and security are guaranteed thanks to the use of uniform standards. Business, on the other hand, benefits from identity data that has been validated by Swiss companies in accordance with Swiss standards, as well as from the integration of local payment services.

We want to make all bank-related services available in a single, digital ecosystem.

In other words, the bank will have to concentrate on specific, local niches. Does that mean that the age of the classic universal bank that offers everything under one roof is over?

No, I believe that the opposite is true. If you look at the tech giants, the trend seems to be to offer everything from a single source. Apple, Google and Amazon are constantly expanding their offering, which in turn expands their ecosystem. UBS has gone down this path, too. We want to make all bank-related services available to our clients in a single, digital ecosystem. With our UBS Safe2 service, for example, we have brought the safe deposit box into the digital world. As a result, UBS clients have copies of their IDs, insurance cards and vaccination cards close at hand in digital form at all times, including in emergencies.

Even so, the banks will still have to make some concessions. Which old traditions will they have to break with in order to be successful in the future?

Many processes still haven’t been digitized from end to end. If a new client opens an account using the app, no paper documents are involved. We would now like to introduce the same process for accounts opened at our branches, too.

Which trump cards do banks have up their sleeves in order to stay relevant in the future?

Banks continue to enjoy high levels of trust among the population. This is confirmed again and again in numerous surveys. A recent example is the survey by the opinion polling firm Populus on behalf of Visa. The 2,000 or so respondents to this survey said they would be less concerned about revealing their personal data to a bank than to the government. Banks are also well positioned when it comes to security issues.

In what areas?

Take UBS Security Check, for example. Its purpose is to help users increase their online security so that they can overcome their fears of the digital world.

You speak of security and trust as important features of a banking system. Won’t Generations Y and Z see things differently?

Security will be immensely important to these generations, too. It is also essential that the digital solutions are easy to use and convenient, however. To give an example: the UBS Access app is a simple, convenient and extremely secure method our clients can use to log into their e-banking and mobile banking accounts.

And what about trust? Isn’t digitization making us less dependent on this?

Simple products and services can be completely digitized, but our clients also have a large number of complex needs which cannot be met without personalized advice, even in the digital world. Consider such issues as financing home ownership, passing on one’s estate within the family and succession planning for businesses. These are all personal matters that are better to discuss in confidence rather than dealing with them with an app.

There is no question that the demand for mobile services will grow.

From 2020, the Google generation we have talked about will be in the majority. The fact that they want different banking services is beyond dispute. What is UBS doing in this respect?

Like a large proportion of our young clients, we will be focusing on mobile banking. In October, a third of all active users of UBS Mobile Banking went online only with their smartphones or tablets. There is no question that the demand for mobile services will grow, as the majority of the Google generation wants even more digitization. Our goal is therefore to make UBS’s entire digital offering and all the familiar functions from e-banking available on smartphones as well.

How will UBS clients experience banking in 2020? After all, the company’s investments in Client Experience 2020 are running into the hundreds of millions.

UBS’s objective here is not merely to build individual digital flagships but to offer its clients an all-round package of digital services that is available anywhere and at any time. They will be able to take care of many things themselves while simultaneously being in a position to obtain expert advice quickly and easily for specific matters.

How will UBS ensure that the client experience will offer premium quality in 2020?

We are digitizing all important client pathways in our “digital factory” and are placing the client at the center of all our decisions. We are achieving this by bringing together employees from different parts of the bank. In this way, decisions can be made quickly and locally and responsibility will be strengthened at all ends.

Our involvement in the Swiss digital ecosystem is extremely important to us.

What does "open banking" mean for the banks?

Modern interfaces known as APIs have immense potential for the entire ecosystem. Banks already offer secure interfaces where client requirements demand them, and they will continue opening their interfaces for client-oriented applications in the future. The link-up of our e-banking system to the bexio accounting software and the payment system TWINT are excellent examples of this. In fact, this issue could play an even greater role in connection with SwissID, as the planned cooperation between all relevant market participants could become a decisive success factor for Switzerland as a digital financial center.

Does innovation at banks come from outside or does a certain impetus originate from inside them, too?

Our involvement in the Swiss digital ecosystem is extremely important to us and provides as an excellent source of innovation. At UBS, the agreement on the industry-wide SwissID stemmed from last year’s Kickstart Accelerator program, where we looked into the topic in more detail with a Latvian startup. We also live by a spirit of innovation within the bank. In 2017, we ran our Future of Finance Challenge for the second time, and I am delighted by the number of innovative start-ups we get to know around the world through this program.

What does UBS want to develop itself in the future, and in which areas will it look for partners?

When it comes to solutions that relate to our core business, we do the development ourselves. These include e-banking, the Access app and our digital wealth management solutions, for instance. When it’s a case of developing the digital ecosystem further, however, our approach has been a cooperative one for some time.

Can you name some specific examples?

For our Liquidity Cockpit3, which gives our SME clients the option of planning and monitoring their company’s liquidity directly in UBS e-banking, we are working with the startup bexio. For the UBS Safe project, UBS is cooperating with DSwiss, and for Online Onboarding it works with IDnow.

The latest developments in digital legislation, make me feel very optimistic.

What role will industry-wide collaboration play?

We are currently experiencing a renaissance in industry-wide collaboration. TWINT and SwissID would have been inconceivable a few years ago. Today, all the relevant stakeholders are pulling in the same direction. UBS is campaigning actively for banks to be able to make a fundamental contribution to the digital ecosystem, as with the aforementioned SwissID4) program.

What role do the government and legislation have to play in the digital transformation?

The latest developments in digital legislation, such as the inclusion of video identification in the completely overhauled Ordinance on Electronic Signatures (VZertES), make me feel very optimistic. We also welcome the Federal Council’s intentions in the draft of the Federal Law on Electronic Identification Services, which envisions a division of responsibilities between the government and the private sector. In addition to legislation, the federal, cantonal and municipal authorities are very important service providers which can encourage the use of the digital identity and lead by example in the area of digitization.

When it comes to advising our clients, we have been successfully employing interactive digital solutions.

What effects will digitization have on the branch offices of the bank and its employees?

Digitization is also having an impact on the branch offices. Its purpose is not to replace employees, however, but to support them. When it comes to advising our clients, we have been successfully employing interactive digital solutions aimed at supporting the client advisors during the consultation and further improving the advisory experience for some time. These digital solutions are already used actively by 85 percent of our client advisors.

Can you give an example of a digital solution of this kind?

When providing investment advice, client advisors are assisted by a software program that calculates various scenarios for a portfolio and illustrates them with diagrams. Another example is something called “Remote Advice.” If a client advisor has very specific questions during a client consultation, he or she can link up with an expert on the computer screen. This might be for questions about real estate, tax, inheritance or retirement planning, for instance.

Andreas Kubli, Head of Multichannel Management & Digitization at UBS Switzerland AG.

Pascal Hügli works as a business editor for financialmedia Ltd.

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