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Julius Bär speeds up digital push as COVID-19 forces change in wealth management


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Julius Bär speeds up digital push as COVID-19 forces change in wealth management

Switzerland-based bank Julius Bär Gruppe AG has increased investments in its digital transformation over the first half of 2020 to stay connected to clients who have rapidly moved to online interaction channels amid the COVID-19 pandemic, CEO Philipp Rickenbacher said July 20.

In a matter of weeks, COVID-19 has forced huge changes in wealth management, many of which "are here to stay," Rickenbacher told analysts at the bank's first-half earnings presentation. At the beginning of the year, it would have been "unthinkable" to hold a meeting in a digital format with many of the bank's clients, but now Julius Bär is interacting with them through Webex and various other secure communication platforms, he said.

"We will see more creative, more diverse ways of interaction moving forward," he said. "This is not just a matter of avoiding travel and entertainment costs. It's really a matter of how do we bring expertise much better in front of our clients."

Julius Bär embraced the changing environment in the first half of the year and has shifted more than CHF15 million of project funds to invest in digital initiatives with immediate applicability, Rickenbacher said. The bank has expanded the number of platforms it uses to communicate with clients and advise them, with further initiatives planned in the second half of 2020, the CEO said.

In July, the bank launched a pilot for digital onboarding, including video identification, in Switzerland and will introduce a new secure WhatsApp channel next month, Rickenbacher said.

Remote work

Despite the crisis, Julius Bär has maintained stable operations during the first half of the year with 90% of staff working remotely and "rigorous safety measures in place," the CEO said. Remote work is likely to bring about a fundamental change in the internal functioning of the bank and the wider industry in the future, he said.

"We have all discovered ... that actually a proper balance of working from home and working centrally from the office can produce outstanding results," he said.

With remote work becoming part of business life wealth managers will have the flexibility to bring more people into the workforce which will "help on the diversity side," Rickenbacher said. He also predicted a cultural transformation coming from the COVID-19 crisis as sector companies place more trust in their employees in a remote working environment.

"Those are important transforming factors for our business ... and I'm looking forward to bringing that into our transformation journey over the next few years," Rickenbacher said.

The bank's staff have not only adapted to the new situation but have also inspired many of the measures the bank has taken to transform the way it does business over the past six months, the CEO said. A Global Thinkathon initiative Julius Bär launched in cooperation with the F10 Zurich Accelerator 2020 has generated additional ideas from 300 employees across 60 teams at the bank for the coming months, including suggestions on how to improve the relationship managers' connectivity to clients and how to optimize workspace planning in a remote working world, Rickenbacher said.

Strategy on track

The COVID-19 mitigating measures fit into Julius Bär's ongoing restructuring, which is aimed at ensuring sustainable profit growth in the future and moving the bank away from a pure asset-gathering model, the CEO said.

In February, just before the onset of the pandemic, the bank launched a three-year strategy with the target of tackling structural challenges such as the erosion of margins in the wealth management sector and achieving CHF200 million cost savings and a revenue increase of more than CHF150 million by 2022. To meet these goals, the bank wants to become leaner and more efficient by reducing staff numbers, boosting digitization, and improving its value proposition to ultra-rich clients, high-net-worth individuals, and intermediaries.

Despite the health crisis, the bank has been able to keep up with a "fast-paced" execution of its strategy and is on track to meet the mid-term goals, according to Rickenbacher.

"This transformation is today in full swing," he said.

Owing to strong trading volumes amid the market volatility in the first half of the year, Julius Bär booked a 43.1% year-over-year surge in net profit attributable to shareholders to CHF490.9 million. Rickenbacher was upbeat in his outlook for the second half, saying the bank is entering the period in a position of strength and is poised to capture market volatility.